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Joan Shorenstein Center on the Press, Politics and Public Policy Discussion Paper Series #D-81, September 2013 RIPTIDE: What Really Happened to the News Business An oral history of the epic collision between journalism and digital technology, 1980 to the present Reported by John Huey, Martin Nisenholtz and Paul Sagan Shorenstein Center Fellows, Spring 2013 With the Nieman Journalism Lab www.digitalriptide.org Licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 United States. Table of Contents 1. PREFACE ........................................................................................................................................... 2 2. INTRODUCTION: RIPTIDE ................................................................................................................. 4 3. PREHISTORY: THE TELETEXT/VIDEOTEX ERA ................................................................................. 10 4. AMERICA GOES ONLINE (or, It’s the PC, stupid!) ........................................................................... 15 5. THE BIG BANG ................................................................................................................................ 23 6. THE ORIGINAL SIN .......................................................................................................................... 35 7. THEN CAME CABLE ......................................................................................................................... 41 8. RETURN OF NEWSPAPERS.............................................................................................................. 52 9. THE NERDS & THE NEWSIES ........................................................................................................... 59 10. THE INNOVATOR’S DILEMMA ........................................................................................................ 64 11. BIRTHING THE BLOGOSPHERE ....................................................................................................... 69 12. THE RISING TIDE LIFTS ALL BOATS ................................................................................................. 77 13. FROM THE ASHES ........................................................................................................................... 84 14. GOOGLE: THE SECOND COMING.................................................................................................... 95 15. THE ADVERTISING ROLLER COASTER ............................................................................................. 99 16. GOING SOCIAL. AND PAYING TO PLAY ......................................................................................... 106 17. TIME WILL TELL ............................................................................................................................ 118 PREFACE This project is the result of collaboration among three Fellows at the Joan Shorenstein Center at the Harvard Kennedy School during the 2013 spring term. JOHN HUEY has been a writer, editor, and publishing executive for 40 years, beginning as a reporter for a small weekly newspaper in Georgia before moving on to report for The Atlanta Constitution. There he filed his first story electronically from the Georgia state capitol on a Xerox Telecopier (six minutes a page). He spent 13 years at The Wall Street Journal, where he covered the Nicaraguan revolution of 1978 (filed by hotel Telex) and was founding managing editor of The Wall Street Journal/Europe. He worked for 24 years at Time Inc., where he covered countless industry disruptions as a writer and later editor of FORTUNE. He retired from Time Inc. at the end of 2012, after serving seven years as its editor-in-chief. 2 MARTIN NISENHOLTZ is a senior advisor for The New York Times Company and an adjunct professor at the Columbia Journalism School. He was senior vice president for digital operations at The New York Times Company from 2005 to 2012. He was the founding leader for nytimes.com in 1996 and was later CEO of New York Times Digital. Before joining the Times in 1995, he founded the Interactive Marketing Group at Ogilvy and Mather, among the world’s first digital advertising agencies. More than any of the three of us, he has been at the heart of many of the crucial moments chronicled here. As such, he is an interviewee as well as an interviewer in this oral history project. He began his career as an assistant professor at NYU's Interactive Telecommunications Program, where he worked on an early version of Teletext in 1979. PAUL SAGAN is executive vice chairman of Akamai Technologies (a company that counts thousands of significant Internet players as clients and delivers as much as an estimated quarter of the Web’s traffic daily). He was employee #15 and the company’s CEO from 2005 until 2013. He grew up in a newspaper publishing family in Chicago and began his journalism career as a news writer at WCBS-TV more than 30 years ago. He went on to become news director and the recipient of three Emmy Awards for broadcast journalism in New York. He designed and launched NY1 News for Time Warner and was president and editor of new media at Time Inc. in the mid ’90s, where he worked on the creation of Pathfinder, Roadrunner, and the Full Service Network. We are extremely grateful for the support of the Shorenstein Center. Alex S. Jones, the Laurence M. Lombard Lecturer in the Press and Public Policy and the director of the Center, believed in us and our project, and he trusted that we would create something worthy of the Center’s reputation for excellent scholarship and provocative thinking. In addition, Tom Patterson, the Bradlee Professor Government and the Press, and Nancy Palmer, the Center’s executive director, provided important and timely input. Edith Holway, the events and Fellows program director, guided us without a hitch through many of the ins and outs of being a Fellow at Harvard. Janell Sims, the communications manager, was a tireless partner in helping us proof and ready the text. We are in debt to the Nieman Foundation, particularly to Joshua Benton, director of the Nieman Journalism Lab, for his work building this site. We received timely and insightful help from Alex Remington, now a product manager at The Washington Post and previously a student at the Harvard Kennedy School and our graduate research assistant, without whose assistance we simply would not have been able to complete this project. Yin Chen, another Kennedy School student, also joined our team as a graduate research assistant and supported our effort. In addition, two Harvard College students, Corinne Curcie and Tom Silver, ably and critically assisted us along the way. 3 We also want to thank our fellow Shorenstein Center Fellow Peter Hamby, from CNN, for filling in for us to interview John Harris and Jim VandeHei at Politico; Randall Rothenberg, president and CEO of the Interactive Advertising Bureau, for interviewing Sir Martin Sorrell; and our friend Walter Isaacson, president and CEO of the Aspen Institute, for jumping in to interview Steve Case. We want to be clear, however, that at the end of the day, we three selected the topic, recruited the interview subjects, and are responsible for the outcome of the project. We conducted all but three of the interviews ourselves and we noted those three above. We relied on CastingWords to transcribe the interviews, and we generally exercised only minimal cleanup of the transcripts, so we acknowledge that some discrepancies from the video and audio may exist. We hold no one else accountable for the content of this effort but ourselves. But we hope that others will find this collection of interviews and attendant material interesting and helpful as they try to understand and unravel what really happened to the news business. Perhaps, future Shorenstein Center Fellows will conduct additional interviews for this story and contribute more material to make this a growing archive. In particular, we recognize that disruption is happening on a global basis, and we hope that others will follow with a more international perspective. While we came to believe certain things about what did happen and why—and we share those ideas and call them out in our narrative here—we invite you, the reader, to dig in and draw your own conclusions. John Huey Martin Nisenholtz Paul Sagan September 2013 INTRODUCTION: RIPTIDE For most of the 20th century, any list of America’s wealthiest families would include quite a few publishers generally considered to be in the “news business”: the Hearsts, the Pulitzers, the Sulzbergers, the Grahams, the Chandlers, the Coxes, the Knights, the Ridders, the Luces, the Bancrofts—a tribute to the fabulous business model that once delivered the country its news. While many of those families remain wealthy today, their historic core businesses are in steep decline (or worse), and their position at the top of the wealth builders has long since been eclipsed by people with other names: Gates, Page and Brin and Schmidt, Zuckerberg, Bezos, 4 Case, and Jobs—builders of digital platforms that, while not specifically targeted at the “news business,” have nonetheless severely disrupted it. The precipitous fall of the industry that produces what we have come to call quality journalism—that is, independently reported, verified, branded information published or broadcast by institutions prepared to “stand by their stories” despite pressures from commercial or government interests—is hardly a fresh subject. Tens of thousands