Adapt or Die: The Future of News and Newspapers in the Digital Revolution
The Fulbright Lecture
September 14, 2011

Thank you, Simon, for that kind introduction. Distinguished guests, ladies and gentlemen, thank you for inviting me to deliver the annual Fulbright lecture here at the Eccles Centre.

For more than 60 years, the Fulbright programme has served as a beacon for the promotion of peace and understanding through educational exchange. Fulbright scholars include Nobel prize winners, artists, diplomats, scientists and aspiring politicians from almost 150 countries.

The Fulbright programme has also acted as a bridge across the Atlantic, bringing Britain and America closer together in a community of shared values. I came to appreciate those special ties during a conversation with Senator Fulbright himself when I was the Financial Times Washington correspondent some 20 years ago.

We met at the Senator’s town house just off Embassy Row in Massachussetts Avenue. Ever gracious, he offered me a cup of’ English breakfast tea before explaining quietly but firmly how the Fulbright programme would evolve after the fall of communism. Then in his eighties, after a political career shaped by the Cold War, he was already looking forward to the next challenge.

Senator Fulbright would have approved heartily of the Eccles Centre which has done so much to promote American studies in this country, inspired by the magnificent collection here at the British Library. Under the leadership of Philip Davies, the Eccles Centre embodies a commitment to the transatlantic relationship – the cornerstone of European security for more than 50 years and one which will prove equally vital in the 21st century.

My own special relationship with America began at an early age. My father, a fellow journalist, named me after Franklin Delano Roosevelt. As a first name, Franklin failed to survive my early childhood – does any one seriously want to be called Frankie? – but I can still remember my father’s response when asked why he had named one of his twin boys after FDR. “Because President Roosevelt saved America from the Depression and Europe from fascism.”

I have spent much of my professional career as a journalist in America. More than 10 years, resident in Washington, New York and a hardship posting at the University of California, Berkeley. There I spent a sabbatical at the Institute for Governmental Studies under the tutelage of that great Anglophile and presidential scholar Nelson Polsby.

I will always be grateful, too, for a seminal journalistic experience as a Lawrence Stern fellow at the Washington Post in the summer of 1985. Ben Bradlee was editor and there was a swagger about the Post newsroom. Memories of the Watergate scandal were still fresh. So, incidentally, was the scandal of Janet Cooke, who won a Pulitzer prize for a gripping but fabricated series about an eight-year-old heroin addict in the nation’s capital. But that’s another story.

For three months, I worked on the Post’s national staff alongside some of the giants of American journalism: Bob Woodward, Don Oberdorfer, Bob Kaiser, George Wilson, and, of course, Bradlee himself. I learnt how to craft an intro, cultivate sources, and chair an evening news conference. And I was exposed to the culture of a great American newspaper. The news prose and lay-out might have been a tad stodgy compared to feisty British rivals, but the spirit of inquiry was indomitable and the commitment to quality absolute.

The Stern fellowship for young(ish) British journalists is still going strong and so is Ben Bradlee, who just celebrated his 90th birthday. The Post is now led by Marcus Brauchli – full disclosure, a personal friend – and it still produces some great journalism.

Think of its ground-breaking Top Secret America which exposed in graphic detail the growth of the national security state after the September 11 terrorist attacks. But it is no disrespect to Marcus or the many other fine reporters and editors to say that the Post – while still a formidable news organisation – is no longer the newspaper it was.

Many other metropolitan dailies are suffering from the same plight as the Post: declining circulation, a steady migration of advertising and readers online, especially among the younger generation. The Chicago Tribune, the Los Angeles Times, the Philadelphia Inquirer, the Rocky Mountain News, the Oakland Tribune, the Tucson Citizen are either scaling back, filing for Chapter XI bankruptcy or simply moving online.

There is nothing new about this. The secular shift to the web was apparent well before the dotcom boom but accelerated during the global financial crisis. More than 100 newspapers in the US shut down in 2009 alone.

According to the OECD, in 2008 American newspapers collectively relied on advertising for 87 per cent of their total revenue, more than any other country surveyed. The post-Lehman crash recession compounded the collective pain. Between 2007-2009, newspaper revenues fell by 10 per cent in Germany, in Britain by 21 per cent but in the US by 30 per cent.

This data is largely drawn from Tom Standage’s excellent survey on the news business published in the Economist this summer. Standage also noted that the national TV networks in America employed 500 journalists only on their staff in 2009, while daily newspapers employed more than 40,000, albeit down from 56,000 in 2001.

Why did the US fare a lot worse than others? Because newspapers’ cost structure was heavier and, arguably, more resistant to reform. By the 1970s, the big metropolitan dailies had grown complacent. Their decades-old local advertising monopolies delivered profit margins of between 30 and 40 per cent. Newsroom numbers were much higher than, say, in London. Earlier this decade, the Los Angeles Times and New York Times employed 1200 people each, double the present number of journalists at the Financial Times, which includes more than 130 foreign correspondents.

The post-war American newsroom resembled a vast factory churning out multiple editions through the night. Reporters spent days, sometimes weeks, on a single story. And when they finally produced, their copy would go through three, four, even five pairs of hands before it went into the paper;. This process of revision or “sub editing”, eliminated errors, honed the prose, and applied the finishing touch, the headline.

Across the Atlantic, the same industrial approach to the production of news prevailed. Here is Harold Evans, the doyen of Fleet Street editors, writing in his autobiography about his early days as a sub-editor on the Manchester Evening News.

“Reporters and subs had to operate like a souped-up Internet news services, producing eight editions in six hours – more if big news broke – and without the crutch of desktop computers….Manchester was Newspaper City. Six million people in the north of England got their news through Manchester. Daily and Sunday, no fewer than 20 newspapers were written, edited and published within a couple of square miles of the four main railway stations.”

This was a world where journalism was viewed and practised as a craft, the world of the Linotype machine, a seven-foot tall iron monster which, as Evans writes, possessed a 90-character keyboard which a deft operator could automatically render words into metal slugs at the rate of five column lines a minute. This was, literally, news hot off the press.

The craftsmanship bred a guild mentality which proved ultimately fatal. The print unions who controlled production and distribution of the newspaper came to hold the industry to ransom. Every change in working practice was an excuse for a pay raise. Costs spiralled. By the 1980s, the disruption had become intolerable. Several national titles went on life support. It took an outsider – Rupert Murdoch – to rescue the newspaper industry.

Murdoch’s brilliantly planned and executed move to Wapping circumvented the unions and allowed Times Newspapers to make the leap from hot metal to cold type computerised printing. The rest of the industry followed. With labour costs cut, newspapers were able to invest in new sections such as Property, Health, Travel and other lifestyle subjects which in turn generated more advertising. It seemed like a virtuous circle.

The advent of the internet exposed the fact that the old business model for newspapers was broken. The world wide web fundamentally changed the media eco-system, challenging established journalistic practice in what is known as the mainstream media: radio, television, newspapers and magazines.

As media experts such as Clay Shirky have noted: in an increasingly networked world, power has shifted from the publisher to the consumer. Passive consumers can turn into active publishers operating around the clock in the so-called blogosphere. This world is more anarchic, but also more democratic.

TV anchormen and women may once have been cast as the Voice of God, and newspaper editors as gatekeepers and arbiters of what constitutes news. The latter may to a degree still hold true. If not, my job application is in the post. More seriously, the digital revolution has led to what Karl Marx – a natural blogger if I ever read one – would have described as a new correlation of forces.

Thanks to social media such as Facebook and Twitter, a far wider range of people take part in gathering, filtering and distributing news. News of the death of Osama Bin Laden appeared first in the Twittersphere. Social media has also helped to mobilise the crowd, from Tehran to Tottenham.

The mainstream media will face competition not only from social media, but also aggregators – not just upstarts such as the Daily Beast, Drudge and the Huffington Post but also from giants such as Amazon, Apple, Google and Microsoft, each of which have vast quantities of reader data and may be tempted to diversify further into content. More on that later.

How has the Financial Times reacted to the challenge of the digital revolution? First and foremost through our commitment to quality. Our global readership is demanding. Our journalism needs to be deep, original and above all accurate.

In a splintered media landscape, we have sought actively to differentiate ourselves. The FT’s newsprint, with its salmon pink tinge, sets us apart. We owe this marketing masterstroke to an enterprising Scot by the name of Douglas MacRae, the FT’s first managing director, who in 1893 ditched white newsprint in favour of a blushing pink.

Some might point to another in-built advantage: we deal in business and financial news, where accurate and insightful information is a commodity consumers are willing to pay for. As our advertising slogan says: we live in Financial Times. But this does not do full justice to the transformation we have achieved – and are still working to achieve – so we can prosper in the years ahead.

First, we doubled the price of the newspaper on the retail stand in Britain and raised cover prices elsewhere around the world. The price sent a powerful signal to the market and to our own journalists that the FT is a premium product.

Second, we rapidly developed our subscription business, both digitally on ft.com and in newspaper form to reduce our dependence on advertising. That way we also reduced our reliance on the casual purchaser in favour of the loyal subscriber. And we recast the debate on newspaper circulation in terms of a more meaningful definition of audience, based on both print and digital consumers.

Third, we swung firmly behind the principle of charging for content, using a meter model based on frequency of readership. Four years on, the meter model has proved to be an industry pioneer and an unequivocal success. The FT now has nearly 4m registered users, a combined paid print and digital circulation of 585,000 and a combined print and online average daily readership of over two million people worldwide. Other publications, notably the New York Times, are now adopting similar paid meter models and, by all accounts, have met with promising results.

Fourth, we abandoned or revised arrangements which allowed other news providers or aggregators to sell our content to third parties in return for a fee. In future, we determined, we would sell direct to our customers or offer our distributors a licensing arrangement. And we would aggressively pursue any party seeking to circumvent our pay walls through cookies or sharing of passwords.

Fifth, we made sweeping editorial changes which complemented our commercial strategy. These were founded on the principle of the integrated newsroom, whereby all journalists were required to work both for the print and digital channels. More than a decade later, we have a fully flexible news operation in which reporters and editors work seamlessly in print and online.

The FT approach does not necessarily lend itself to being adopted by others. We live in a time of great experimentation. Associated Newspapers – which publishes the Daily Mail and Mail on Sunday – has enjoyed tremendous success with its free access model. Last month, Mail Online – with its arresting showbiz front page – became the second most visited website in the US with almost 37m page views, surpassing the Huffington Post. And, according to Associated, Mail Online is profitable, exploiting its worldwide reach to attract advertisers.

I am often asked how long newspapers can survive. My response is that the decline of the newspaper does not necessarily translate into the death of the newspaper. This is not nostalgia or some irrational fondness for dead trees – print newspapers can still be profitable products; many of our readers and advertisers still want them; and our journalists still know how to write and edit a great print newspaper. And print advertising, while declining as a portion of revenues, is still a powerful machine.

Moreover, new, more efficient forms of printing are springing up which are less expensive than the industrial style plant with gigantic (and costly) presses. The FT is now printing digitally in Cyprus, Malta and soon Brazil. The quality of reproduction is good and the distribution costs far cheaper than the traditional format.

Our task is to ensure the newspaper evolves in step with the mobile and digital products. This means changing our traditional view of the newspaper as a constantly updated and tweaked summary of news and commentary produced in multiple editions through the night. In future, the newspaper will likely become an amalgam of the best (and sometimes timeless) content, whether news, analysis or commentary.

By contrast, the web product will increasingly serve as the form which produces “the news now”. It will be rawer and more immediate than the printed form. Editors will have to distinguish between “high worth news and analysis” – content that must live on the web – and material that can be enriched and refined for a more cut-and-keep, lasting form for print. In sum, the web will likely adopt more of a broadcast mentality, compared to its more considered cousin, the newspaper.

The FT is now engaged in translating these ideas into practice. We can learn lessons from others: the Svenska Dagbladet in Stockholm has propagated the notion of “fast” and “slow” journalism for the web and print. The Swedish paper now reserves a dedicated amount of space for deep and original reporting on matters of public interest. Reporting the news of the day is limited, barring an important breaking story.

We live in a period of great experimentation. And that leads me to today’s conundrum: however much the mainstream media on both sides of the Atlantic would like to separate themselves from the aggregators, bloggers and assorted purveyors of news, the fact is we all linked in a complex digital ecosystem which has rendered national jurisdictions porous, if not at risk of being washed away. And this raises serious regulatory issues.

As Marcus Brauchli noted in a Harvard lecture earlier this year: “In the past newcomer technologies co-existed with the media that came before. So television co-existed with radio which co-existed with magazines and newspapers.Now suddenly we all inhabit the same digital realm.”

Yet co-existence does not mean that everyone is playing by the same rules or on the same level playing field. In the US, leading newspapers such as the New York Times, the Wall Street Journal and the Washington Post are committed to the separation of news from comment. They would all subscribe to C.P.Scott’s dictum: comment is free, facts are sacred.

Some may find this commitment to impartiality reporting quaint; cynics would say it’s a stretch. But my transatlantic colleagues take it seriously. Indeed, unlike the British newsroom, the separation is institutionalised: A managing editor is responsible for news coverage, while an editorial page editor is in charge of the op-ed page.

The web insurgents have no such commitment to impartiality, let alone objectivity. On the contrary, many take delight in their partisanship and rumour-mongering. As Nick Denton, a former Financial Times reporter and now New York-based founder of Gawker – motto Today’s Gossip is Tomorrow’s News – once told the Washington Post: “We may inadvertently practise journalism. But that is not the institutional intention.”

New media often seems to walk on both sides of the fence: they shun the label of journalist but are happy to use it as a badge of respectability to hide their often deeply ideological agendas. And at the same time, so-called aggregators such as the Huffington Post depend – to a degree – on the work of the mainstream media for their own existence.

Bill Keller, who has just stepped down as editor of the New York Times, put this succinctly: “Aggregation” can mean smart people sharing their reading lists, plugging one another into the bounty of the information universe. It kind of describes what I do as an editor. But too often it amounts to taking words written by other people, packaging them on your own Web site and harvesting revenue that might otherwise be directed to the originators of the material. In Somalia this would be called piracy. In the mediasphere, it is a respected business model.”

Now both HuffPo and the Beast have lately invested in their journalism, building up investigative teams and a stable of top commentators. Both Huffpo and The Beast, now teamed up with Newsweek, have also broken cracking stories. The latest being the Beast’s revelations that Facebook hired a West Coast public relations firm to smear Google. Yet neither can seriously match the deep and original reporting of the New York Times in say Afghanistan or Iraq.

Some would happily conflate the notion of the free press with access to free content, but this is a road to perdition. Serious journalism costs serious money. As one news wag put it: “Journalism wants to be free. Journalists want to eat.”

We should however move beyond the argument over aggregation and proprietary information, and examine the implication of the new digital ecosystem that new media is increasingly moving into the mainstream media’s reporting space. That brings with it responsibilities and raises the question of a level regulatory playing field

The absence of such was exposed during the controversy over super-injunctions or gagging orders. While Twitter and other outlets were happily spreading the name of an errant footballer, the mainstream media were banned from mentioning the mere existence of the gagging order, let alone the name of the Lothario. After a Scottish newspaper revealed his identity barring the eyes, he was named in Parliament as Manchester United’s roving left-wing Ryan Giggs.

Edward VIII would have recognised, if not sympathised with Ryan Giggs. In the UK, the British press observed a news black-out on the royal affair with Wallis Simpson, thanks to a gentleman’s agreement between the King, Lord Beaverbrook and the Newspaper Publishers Association. The American press – including the New York Times – brooked no such deal and their reporting helped precipitate the Abdication.

Today, the transformational power of technology is altering our notion of the public realm and rendering media laws and practice obsolete. Again, this shift is not new; but it has crystallised in the wake of the controversy over phone hacking, now the subject of both a police investigation and a judicial inquiry led by Lord Leveson.

As I observed in this year’s Cudlipp lecture, the phone-hacking scandal marks a watershed – not just for News International but also for tabloid journalism. The practice of phone-hacking and so-called blagging for confidential information was widespread (and not only among the tabloids). The Information Commissioner’s report in 2006 – scandalously neglected at the time – showed that 305 journalists used private investigators; while more than 17,000 invoices or purchase orders were discovered. The FT was not on the list.

Beyond the conviction of one News of the World journalist and one private investigator, Glenn Mulcaire, no further action was taken; not by the police, not by the courts, and not by the Press Complaints Commission. On the contrary, the PCC belittled the Guardian’s intrepid reporting, and the Metropolitan Police fluffed a chance to reopen their investigations in 2009.

Most important of all, the British newspaper industry itself did not take the story seriously, with the exception of the Guardian. It took a foreign newspaper – the New York Times – to break fresh ground after an investigation lasting many months. Aside from a few lone voices, no one dared speak the truth: that self-regulation had failed.

As for News International, executives repeatedly told Parliament and the police that phone hacking was confined to a rogue actor, the News of the World’s royal correspondent Clive Goodman, whose information was supplied by Mr Mulcaire. It now transpires that phone hacking at the News of the World was on an industrial scale, with targets ranging from film stars to football commentators and, most horrifying of all, the murdered schoolgirl Millie Dowler. By the latest count, the News of the World held the phone numbers of some 3870 people.

By what stretch of the imagination can such practices be justified as in the public interest? And why were the authorities and News of the World’s peers so reluctant to challenge them? These matters will be examined by the Leveson inquiry, but I would like to venture some theories tonight.

It would be comforting to justify the news black-out in terms of the centuries’ old respect for press freedom. But my own experience of libel threats and court injunctions, usually levelled by the rich and famous, suggests respect is skin-deep. The uncomfortable truth is that politicians, the police and certain corners of the press have enjoyed too cosy a relationship, creating the conditions for a conspiracy of silence.

Today, as I said last January, the political elite in Britain have all worked in or with the media industry. David Cameron worked in a commercial TV company. Jeremy Hunt ran a publishing business. Michael Gove was a newspaper columnist. Boris Johnson was a magazine editor (and still writes a weekly newspaper column). Ed Miliband was a TV researcher. And Ed Balls was an editorial writer for the FT.

In the case of News Corporation, the relationships were especially tight, not just with the Metropolitan Police but also the political elite. And this in turn is surely linked to the preponderance of power enjoyed by the Murdoch empire in Britain. Even without the News of the World, its newspapers hold 35 per cent of the market, while BSkyB, in which its holds a near 40 per cent stake, has more revenues than the BBC and ITV combined.

Rupert Murdoch and his colleagues have brilliantly exploited this dominant position, not just to make money but also to exert a profound influence over public life in this country. Others may look upon this influence with indifference, a price worth paying for the entrepreneurial flair which, it should not be forgotten, rescued the British newspaper industry. In this view, Mr Murdoch is a great bad man, in the words of Conrad Black.

But the News of the World scandal should give us pause for thought. Not just because of News International’s painfully inadequate response, but also because of the culture which bred such practices. The best thing now is for the mainstream media to clean house and set out new ideas to reform our self-regulatory system.

The first proposition is hardly contentious. The Press Complaints Commission in its current form is dead. Not because it is dishonest or unethical. But because it no longer commands public confidence. The PCC – whatever its qualities- has shown itself to be incapable of regulating the media’s baronies. Whether or not that view is fair is irrelevant.

Second, it is time to open-up the bodies responsible for self-regulation, bringing in outsiders and reducing if not eliminating the role of insiders. Many of the remedies were put forward in the prescient report by the Media Standards Trust in 2009. For example, on the PCC itself, nine of the members (excluding the chair) are “lay” members, while seven are working newspaper and magazine editors. There are no independent members either on the Editorial Code Committee or the PressBoard of Finance, all of which are occupied by editors or senior executives of news organisations. This system, in other words, is riddled with conflicts of interest.

Third, the new body – call it the Media Standards Commission – should be a regulator with intelligible statements of principle, measurable standards and a clear mandate for intervention. It can build on useful work by the PCC. Real sanctions should include timely and prominent redress for corrections or adverse adjudications. The question of investigatory powers is more problematic.

Investigatory powers would be a serious weapon to combat wrongdoing. But it is important to distinguish between criminal misconduct which is a matter for the police, and unethical or unprofessional journalistic behaviour. Any investigations would require a fairly high threshold, to be approved by the appropriate (and independent!) committee of the new self-regulatory body. Otherwise, letting loose a trigger-happy team of investigators would be costly and open to abuse.

Fourth, it is vital that the industry participates fully in the new system. The current PCC system is dangerously close to a la carte. In future, all printed media should be “encouraged” to be full members and committed to making it work. There should be consequences for those who opt out a la Express Newspapers, perhaps via a form of statutory levy on advertising revenues for non-participants, with such levies being used to fund the new body.

Should the new system embrace new media such as the Huffington Post UK or individual political bloggers such as Guido Fawkes? My answer is Yes, not simply in the interests of a level playing field but also because the distinction between old and new media are rapidly becoming meaningless in the new digital eco-system. New media is moving into reporting. Old media is blogging and tweeting, and using social media to promote and distribute news and analysis around the world.

Yet with certain rights go certain obligations. As regards the content pirates, it is time they joined the merchant navy. Wholesale copying of original content cannot be considered a legitimate journalistic enterprise. Even powerful aggregators such as Google have recognised as much; others should follow suit.

Social media, tactical partnerships such as between WikiLeaks and the New York Times, Guardian and Der Spiegel as well as cross-media collaboration with new philanthro-journalism outfits such as ProPublica or the Centre for Investigative Journalism underline how the world is changing.

Nor is it too fanciful to imagine future partnerships between mainstream media and aggregators such as Apple, Google and Amazon, each of whom have powerful distribution channels and stores of reader information but remain wary of moving into the primary content business.

Given this flux, we should therefore be wary about creating a system that licenses or defines journalists. By implication such a system invests power in those who award the licences. Britain has no interest in encouraging efforts to licence journalists internationally. There are plenty of self-styled democracies toying with or in the process of passing new media laws intended to curb legitimate journalistic endeavour which holds power to account.

Finally, in the absence of a First Amendment in this country, it is time for a serious debate on the public interest, the primary defence of freedom of the press. This is easier said than done. What is clear such a definition must surely extend beyond the trope that the public interest is, by definition, what the public is interested in.

Some restraints on free expression are necessary, and are recognised by the press as being so. Protection of minors or matters of vital national security, for example. Mark Thompson, the BBC director general has argued, correctly in my view, that subterfuge may be justified in the pursuit of the public interest. But the bar must be set high for any journalist to consider either breaking the law or appearing to be in violation of the law.

The criteria for assessing responsible journalism pursued the public interest were put forward by Lord Justice Nicholls in the 1999 case of Reynolds versus the Sunday Times. These include the importance of the story, the status of such information, the status of the source, the urgency of the matter, the steps taken to verify the story as well as the tone of the article.

In some eyes, the Reynolds defence has been eroded by subsequent rulings in the UK courts – and has become a thin reed upon which to rest a robust public interest defence in libel cases. Moreover, when it comes to weighing the importance of weighing the right to privacy and the public interest, the European Convention on Human Rights has also tilted toward the playing field against the press. So there is plenty to discuss.

Ladies and Gentlemen, it is time for the mainstream media in this country to rebuild trust with its readers and viewers. That must means adhering to basic standards of accuracy, fairness, and intellectual honesty.

We journalists will also have to be more a bit more open about the way we do business. We are not members of a secret society. Newspapers can and should publish their respective codes of conduct. Journalists should be more forthcoming about their real and potential conflicts of interest, whether it be accepting gifts, commanding fees for speeches, or dealing in stocks and shares. Other professions such as bankers and politicians have suffered similar scrutiny. The Fourth Estate cannot expect to be exempt.

But the press in this country should not succumb to self-flagellation. In the end, we – not the police – uncovered the News of the World scandal. Unlike the American press, the majority of newspapers were rightly sceptical about the case for invading Saddam Hussein’s Iraq.

In the final resort, the business of journalism is about supplying the public with solid, reliable information and, yes, a healthy dose of entertainment. So let’s not abandon faith, just yet.

To paraphrase Winston Churchill, I would like to think the press can, like the United States be relied upon to do the right thing, having exhausted all the alternatives.”

On that transatlantic note, thank you for coming tonight.

 

ends