The trouble with Brill’s not-so-secret memo

My apologies for not being right on top of this earlier in the week. I just had a chance to read Steven Brill’s no-longer-confidential memo, “Turning Around the Times — and Journalism,” posted on Romenesko, and I’ve got a few observations.

First, a bit of praise for Brill, who, near the beginning of his career, wrote one of the bravest books I’ve ever read — “The Teamsters,” about an organization that, at the time of publication (1979), was more a criminal enterprise than it was a union. I don’t know how Brill found the courage to start his car in the morning.

And though I’ve weighed in several times (here and here) on why it doesn’t make sense to think that newspapers will be able to charge a fee to their online customers, I understand the problem. Even though what you pay for a print edition doesn’t even cover the cost of manufacturing and distributing it, the fact — and the problem — is that print advertising is far more lucrative than online advertising. Never is a long time, but it’s beginning to look like Web advertising may never support the public-interest journalism on which a healthy, self-governing society depends.

So I’m sympathetic to, though not supportive of, Brill’s ideas for charging online customers. It’s possible that it might even work for the Times because of its unique appeal. There are probably quite a few people who’d pay for access to the Times, but not for anything else. And therein lies one of problems with his plan, though by no means the only one.

Here’s the biggest drawback I see in Brill’s proposal: it would end blogging, as valuable a journalistic form as has been developed since the inverted pyramid. A really good blog post might link to three, four or five news stories — maybe more. A really good blogger might skim through 10, 15 or 20 stories in the course of synthesizing them into that post. Finally, that blogger might look at many dozens of news sources on a regular or semi-regular basis.

Obviously, bloggers — most of whom are doing it for no money — cannot afford to subscribe to dozens of online newspapers and magazines. Even if they could, they want to know that when they link to particular stories, their readers will be able to follow the links and read those stories as well. How many online news sources is a typical blog reader supposed to subscribe to?

Micropayments, which Brill also mentions, get around this. Properly implemented, they’re deducted automatically. But though 10 cents an article might seem reasonable, do you really want to pay $1 to read a well-constructed blog post and follow all the links? Of course you don’t. No one is going to do such a thing.

Brill says that if the Times charges $1 per month to each of its 20 million unique monthly visitor, that would generate $240 million a year. I’ll withhold my sarcasm, because this is math, and experience tells me that I could be wrong. But it strikes me that Brill has convinced himself that the Times could get a buck out of every person who, at some point during the course of a month, clicks on a link to a Times story that he found via a search engine. Intuitively, it seems to me that they’re not going to do that, and I’m pretty sure Brill would concede the point if he’d think about it.

The only folks who are going to pay $1 a month are the journalism geeks like me, who actually prop open their laptops at breakfast and read a good chunk of the Times online. And I suspect the number of people who actually read the paper that way is far, far smaller than 20 million.

Case in point: Christian Science Monitor editor John Yemma told me last fall that 84 percent of visitors to the paper’s Web site come in via search engines, aggregators and blogs. Let’s say it’s the same for the Times. Let’s say you could get every one of the 16 percent who come in through the front door to pay $1 a month. That’s $38.4 million for the year, not $240 million.

I realize that my critique would appear to leave no way out of the dilemma in which the Times and other newspapers find themselves. I happen to think there may be more life left in the print edition than we all imagined a couple of years ago. I’d raise the price by quite a bit, maybe offer some premium, print-only features (heresy, I know, but worth thinking about) and perhaps offer those well-heeled customers access to some special services.

A solution? No. But it might work as a holding action until we can figure out what’s next.

Heck of a job, Arthur

No offense to New York Times media reporter Richard Pérez-Peña, but his story today on the New York Times Co. should be seen as the Times Co.’s best case for itself rather than as a tough-minded forensic overview. So in that respect it offers some interesting insights into how Arthur Sulzberger Jr. assesses his reign as chairman of the company and publisher of its flagship newspaper.

And yes, for the most part, Sulzberger thinks he’s doing a hell of a job. Pérez-Peña writes:

Newspaper industry analysts say that despite some published alarms to the contrary, the company has positioned itself well to ride out another year of recession, maybe two. The company still operates at a profit, and analysts say it might have gotten by without the [Carlos] Slim loan, but could not afford to take the risk because borrowing could be even harder in six months or a year.

“But,” said Edward Atorino, an analyst at Benchmark, a research firm, “I think they’ve put The New York Times out of danger.”

And did you know that Times Topics is now a competitor to Wikipedia? No, me either. And Jimmy Wales makes three.

There is no mention of whether the Times Co. would like to peddle the Boston Globe, the subject of near-constant speculation around here.

Pérez-Peña does point to some shortcomings. And the most eye-opening is this: between 1997 and 2004, the company bought back $2.7 billion in stock, a number that is now nearly four times the company’s entire market capitalization of about $726 million.

“[I]t outweighs the prices of all the other second-guessed moves combined,” Pérez-Peña writes, “and it would be more than enough to ensure the company’s security for years to come.”

All that aside, I suspect that Pérez-Peña’s fundamentally sunny take on his newspaper’s future is more accurate than the doomsday scenarios put forth in recent months by Henry Blodget of Silicon Alley and Michael Hirschorn of the Atlantic.

At least I hope so.

Gaddafi to Israel: Drop dead

In the endlessly depressing category of “you can’t make this stuff up,” the New York Times today runs an op-ed by erstwhile Boston Globe columnist Muammar Gaddafi, the terrorist-coddling, human rights-abusing dictator of Libya.

Gaddafi has a solution to the Israeli-Palestinian conflict: wipe Israel off the map. Funny, but I somehow knew he was going to say that.

The Globe’s Kevin Cullen weighs in usefully on Gaddafi today, and Universal Hub wraps up the whole miserable affair.

Note: Gaddafi, Qaddafi and Khadafy are all the same person. I’m going with Gaddafi because that’s how the Globe recently spelled it.

Why Caroline Kennedy dropped out

Looks like the truth is starting to come out about Caroline Kennedy’s now-ended bid for the Senate. The New York Post reports that Gov. David Paterson is letting it be known through an unnamed spokesman that he never intended to choose her. Among other things, it appears that she may have tax and nanny problems.

The New York Times is catching up, but according to the Politico’s Glenn Thrush, the Post is “lead sled dog on the Caroline exit fiasco.” No gold star for the Post, though, as it adds some entirely unsupported sleaze to the mix.

Accurate, but almost certainly not true

If the New York Times doesn’t want to run with something it can’t confirm, I’ve got no problem with that. Still, it’s a little unsettling to see the paper go with the patently ludicrous explanation from “a person told of her decision” that Caroline Kennedy is dropping out of the running for the U.S. Senate because of Ted Kennedy’s illness.

The New York Post, citing anonymous sources, reports that Kennedy withdrew after she learned that New York Gov. David Paterson wasn’t going to pick her.

Ted Kennedy has been fighting terminal brain cancer for months. His seizure yesterday, while scary, changes nothing.

It’s been obvious for some time now that Caroline Kennedy wasn’t going to the Senate. I guess her uncle’s health problems gave her a graceful exit. But that doesn’t mean the Times has to play along.

Obama for sale

The newspaper business may be hurting, but Barack Obama — whether he realizes it or not — is doing what he can to help.

The latest paper to cash in on Obama’s popularity is the Boston Herald. According to a newsroom source, the paper has published an ad-free, 32-page color magazine called “Boston Celebrates President Obama,” which will cost $2.99 when it hits newsstands tomorrow. Overseen by city editor Jennifer Miller, the magazine will include contributions by everyone from Keith Lockhart to Tom and Ray Magliozzi, the hosts of NPR’s “Car Talk.”

The Boston Globe, meanwhile, printed 65,000 copies of an eight-page extra on Tuesday afternoon, following Obama’s swearing-in. The Los Angeles Times and several other papers did the same, and those that didn’t printed more copies of today’s paper than usual.

The New York Times is being unusually aggressive. I managed to scarf a couple of copies on Election Day, visions of eventual eBay riches dancing in my head. Yet the Times is still selling copies of that day’s paper, and has now added today’s edition, along with a lapel pin and a photo. So much for the three copies I scored in Danvers Square at 5:30 this morning.

Maybe I should invest in those Obama coins that Montel Williams is pushing? Uh, I think not.

Reading the Times with Times Reader

Last week’s David Carr column on paid content brought a response from Slate’s Jack Shafer, who reminded us of his love for a product I had frankly forgotten about: Times Reader, a subscriber-only program that lets you download that day’s New York Times and read it offline, at your leisure.

Times Reader is based on some of the earliest ideas for online newspapers — ideas that were washed away by the rise of the Web. Indeed, Shafer even links to a video about the Knight Ridder digital tablet, an early-’90s idea that never came to pass. As envisioned back then, you’d plug your device into a slot on your cable-television box in order to receive newspapers, magazines and possibly books. You’d pay for it all, of course.

Click on image or here for a Flickr slideshow
of page captures from Times Reader

Anyway, Shafer’s latest prompted me to see if a Macintosh version of Times Reader had ever become available. Indeed it had, and I promptly downloaded it for a test drive. Because we subscribe to the Sunday print edition, there’s no extra charge for us. Otherwise, it’s $14.95 a month.

Is it worth it? Reluctantly, I have to say no, except for a certain small subset of readers. If you want to read the Times on your laptop every day in a place without an Internet connection — say, on a commuter train, or a bus — then Times Reader is for you. Of course, even trains and buses are increasingly likely to offer WiFi, so maybe I should describe the target audience as a subset of a subset.

First, the good. The typeface used by Times Reader is strikingly attractive, presented in a three-column format, almost as if you were reading a print newspaper. Because the entire paper resides on your hard drive, navigating Times Reader is very fast. Using the cursor keys, I find that I can skim through the paper much more effectively than I can with the Web edition.

In addition, we all know that the experience of reading a newspaper in print is very different from reading it on the Web. In print, there are boundaries; we’re limited to what the editors have chosen for us. The glory of the Web is that there no limits, but that’s its downfall, too. The temptation is to follow link after link. Before you know it, your intention to read the paper is gone.

Times Reader reimposes those sense of boundaries, especially when you turn off your Internet connection. (There are links, but you can’t follow them unless you’re online.) It’s just you and the paper, so you might as well read it. Unless you are an extremely disciplined person, you’re likely to read more of the Times using Times Reader than you would with the Web edition. If, like me, you don’t have to pay extra for Times Reader, then you ought to give it a try and see if you like it.

So what’s not to like? Quite a lot.

First, despite the attractive typeface and presentation in Times Reader, I actually find the Web version easier to read. The type is plainer, the leading (spacing) wider. I’d also rather have one column to negotiate rather than three. Readability tends to be a subjective judgment, but there you have it.

Second, photography in Times Reader is an afterthought. The Times, like many newspapers, has used its Web site as a way of giving us more, better photojournalism than ever before. Yet Times Reader doesn’t even give us as much as the print edition. There is a “News in Pictures” feature, but it’s completely random and unsatisfying.

Third, the Web edition includes a view of the print-version front page. I have no particular psychic need to have the print edition, but I do like to look at page one to see how different stories were played. You don’t get that with Times Reader, and the organizational scheme is such that, beyond the lead story, you don’t get an entirely clear idea of what’s important and what isn’t.

Fourth, Times Reader isn’t just a closed environment; it’s claustrophobic, even compared to the print edition: there are no ads in Times Reader, and I miss them. Advertising gives you a sense of liveliness, of stuff going on. I hardly ever click on Web ads, but I’m glad they’re there. Of course, Times Reader also cuts you off from all the great online-only content the Times Web site offers — videos, blogs, slideshows and the like.

Finally, I’m not sure all content is present in Times Reader. Last Thursday, for instance, I couldn’t find David Pogue’s technology column (and, as best as I can tell, there is no search function). I was also interested in trying out the crossword puzzle, but the necessary Mac software for my version of OS X (10.5) seems to have been botched.

Times Reader is a valiant attempt to come up with an online newspaper that people will pay for, and it’s something you may consider trying if you want to read the Times in a spot with no reliable Internet connection. But, to my eyes, it’s not nearly as good as either the Times in print or on the Web. Too bad.

Good jobs at good wages

Context is everything. Yesterday, I wrote about the compensation packages of GateHouse Media’s top two officials, chief executive Michael Reed and the just-promoted president and chief operating officer, Kirk Davis.

What I wrote was accurate, but I failed to consider what top executives might be making at other newspaper companies. As it turns out, there’s nothing special about Reed’s salary ($925,000 in 2007) or Davis’ (about $461,000). Reed’s 2006 compensation, $6.4 million, included a lot of stock, the value of which has presumably all but disappeared.

With 2007 revenues of $589 million, GateHouse is on the smaller end of the publicly traded newspaper companies I looked at this morning. But its challenges are as great or greater than those of much larger companies — it’s staggering under a debt load of $1.2 billion, and its stock price has fallen so much that it was delisted this fall by the New York Stock Exchange.

Anyway, here’s a quick cruise around a few other newspaper companies and what they paid their top managers in 2007, ranked by 2007 revenues.

Gannett Co. ($7.4 billion)

  • Craig Dubow, chairman, president and chief executive officer: salary, $1.2 million; total compensation, $7,546,710
  • Gracia Martore, chief financial officer, executive vice president: salary, $700,000; total compensation, $3,026,985
  • Susan Clark-Johnson, chairwoman of U.S. community publishing: salary, $735,000; total compensation, $3,145,339
  • Not-so-fun fact: Employees have been told to take a one-week unpaid furlough during the first quarter of 2009
  • Financials from WSJ.com

New York Times Co. ($3.2 billion)

  • Arthur Sulzberger Jr., chairman: salary, $1,087,000; total compensation, $3,439,280
  • Janet Robinson, chief executive officer: salary, $1 million; total compensation, $4,142,410
  • Michael Golden, vice chairman: salary, $1 million; total compensation, $1,706,579
  • James Follo, chief financial officer and senior vice president: salary, $480,000; total compensation, $859,273
  • Not-so-fun fact: A recent, widely disputed essay in the Atlantic speculates that the flagshap New York Times could cease publishing as early as this May
  • Financials from WSJ.com

McClatchy Co. ($2.3 billion)

  • Gary Pruitt, chairman and CEO: salary, $1.1 million; total compensation, $4,635,355
  • Patrick Talamantes, chief financial officer and vice president for finance: salary, $500,000; total compensation, $938,970
  • Three vice presidents of operations are paid salaries in the range of $500,000 to $600,000; total compensation is around $1.1 million apiece
  • Not-so-fun fact: The debt-burdened chain is trying to sell the Miami Herald, but can’t find any takers
  • Financials from WSJ.com

Journal Register Co. ($463 million)

  • James Hall, chairman and chief executive officer: salary, $394,750; total compensation, 411,233
  • Scott Wright, president and chief operating officer: salary, $201,923; total compensation, $231,040
  • Julie Beck, executive vice president and chief financial officer: salary, $337,500; total compensation, $431,510
  • Robert Jelenic, former chairman and chief executive officer: salary, $945,396; total compensation, $6,318,394 (Jelenic died last month)
  • Not-so-fun fact: The deeply troubled company is closing some of its papers and selling off others
  • Financials from the company’s 2008 proxy statement (PDF)

What’s the takeaway? Top executives at newspaper companies, like top executives everywhere, make a lot of money. We tend not to notice when times are good. But with the newspaper business under siege, such lavish compensation packages seem out of sync, both symbolically and substantively.

On the other hand, if any of these well-paid folks can find a way out of the current morass, they will be worth every cent.

A more optimistic take on the Times Co.

No one doubts that the New York Times Co. is in financial trouble, or that the Times as we know it will someday cease to exist.

But Rick Edmonds, who analyzes the news business for the Poynter Institute, has done a great job of demonstrating that there’s no there there in an attention-grabbing piece in the Atlantic arguing that the Times Co. is rapidly running out of money — and, in a worst-case scenario, could shut down as early as this May.

The Atlantic article, by Michael Hirschorn, is pegged to the writings of financial analyst Henry Blodget, who has been sounding the alarm about the Times Co.’s cash woes for some time now. Hirschorn says even the drastic measures that the Sulzbergers might consider could fall short of being enough: selling their share of the Red Sox (already under way, supposedly), selling About.com (even though it’s one of the few bright spots in their portfolio), even shutting down the Boston Globe.

But Edmonds carefully walks us through the numbers, demonstrating that the payment-due deadline the Times Co. faces in May is not at all what Hirschorn seems to think it is. Edmonds writes:

Long story short, the company will be able to meet the May deadline. And corporate finance is not like an auto loan, in which the repo man comes if you miss a few payments…. [C]reditors typically renegotiate the terms — as they have done to much sicklier newspaper companies than the New York Times Co.

Edmonds also shows that Hirschorn’s comparison of print and online readers isn’t just “not apples-to-apples,” as Hirschorn himself acknowledges, but more in the nature of apples to cinder blocks. In other words, Hirschorn doesn’t even come close.

There are three problems with the newspaper business right now: (1) the Internet is destroying its business model; (2) too many newspaper companies took on way too much debt in building their empires; and (3) the worst recession since the early 1980s, if not the ’30s, is wiping out the advertising that Craigslist didn’t already grab.

Right now, it’s the recession and the debt that are taking the biggest toll on the business; without those, newspapers might have some hope of making a downsized but successful transition to online.

The Times Co. took a couple of small but important steps this week, unrolling lucrative front-page ads in the Times and announcing that it will soon do the same in the Globe. The future of legacy media is going to look very different from what we’re all accustomed to, as Edmonds himself acknowledges. But the Times Co. should be able to make it through the recession. After that, we’ll see.

Photo (cc) by Steve Rhodes and republished here under a Creative Commons license. Some rights reserved.