SimonWaldman.net

This is (nearly) the script of a presentation I gave in Berlin last week - aimed at a German, general media (predominately editorial) audience. Apologies for the lack of pics etc - but a .pdf with the slides embedded is available here.

Web 2.0: A threat or opportunity for newspapers?
Simon Waldman, Director of Digital Strategy, Guardian Media Group
Medienwoche, Berlin, August 30 2007

Good morning, and thank you very much for inviting me here today.
I hope you don’t mind me being a little bit corporate for a moment, but I’d like to talk for a bit about our ownership structure.

I think this is important in the context of what I’m about to say - because I believe the way that an organisation sees the future is very much the result of how much it can - or sometimes can’t - meet the expectations of its owners. And this is proving to be particularly true within the newspaper industry at the moment.

And as you’ll hear, I have a generally optimistic view of our future. I believe the opportunities offered by web 2.0 - and the internet in general - far outweigh the threats. But that is at least partly a result of our owners’ willingness to take the long term view.

We are owned by a trust - The Scott Trust - and as a result, we have no shareholders, nor are we owned by a powerful, wealthy indvididual.
Our core business is Guardian News and Media - home to the Guardian, Observer and our online presence Guardian Unlimited - this is probably the business you will know best - and which I’ll be focussing on today.
Above this sits Guardian Media Group - where I work - and in addition to GNM we have businesses in regional newspapers, radio, and automotive and property classifieds. All of these businesses on the sides of my diagram are there for one purpose: to ensure the financial and editorial independence of the Guardian.

I mention this because I believe ownership has a huge say on how any newspaper publisher will see developments on the web. There is no denying that our industry - particularly in western europe and north America is structurally challenged - and that is almost entirely down to the net.

Those who expect revenues and profits to just keep rising in the light of all this, and margins to remain rock solid have already been disappointed, and I suspect there will be more disappointment to come in the short to medium term.

But I fundamentally believe that newspaper publishers who are prepared to experiment, innovate and invest online will create significant cultural and commercial value as a result of their efforts.

Over the last decade, we have invested steadily in our online presence. Thanks to our ownership we were not forced to spend unnecessary and embarrassing millions during the dotcom boom, nor were we forced to close the whole thing down when the market crashed.

Plenty have spent more than us, some have done some things better than us or quicker than us; but no-one, at least no-one in the UK newspaper market, has done as much as us, as well as us over the last decade - and that is why our online presence, Guardian Unlimited is both profitable, and the clear market leader in terms of audience with some 16m unique users each month, and why have won three consecutive Webby awards for the best newspaper site on the web.

Perhaps more importantly than that, it has allowed us to shift our horizons as an organisation and look beyond the British newspaper market we have traditionally operated in.

Our stated goal now is to be the world’s leading liberal voice. It is a bold ambition - rooted in core values that have been with us for the best part of two centuries, but made possible entirely by the new horizons that the internet has opened up to us over the last decade. We look to a world beyond print, beyond text and pictures; and beyond the UK.

But while our horizons may have shifted - our focus remains the same: quality journalism, regardless of the medium we operate in.

This is just one example of how we now work: a major investigation into how BAE made billions of dollars of payments to a Saudi prince to secure a massive arms deal - the result of months of work. As well as running in the paper and online, we have given it its own site, complete with documentary evidence, interactive graphics and supporting video. Just as important, thanks to the internet, - this now exists as a permanent record. The internet is often seen as a very immediate medium - but just as important for us is the fact it gives our best work - in fact all of our work - a permanent home. Indeed, if you search for BAE today on Google - this investigation now appears on the front page.

Whatever me might have achieved to date is just a start. The online world is constantly evolving - and our traditional competitors improve their sites by the day. But, more than ever before we have to look beyond the newspaper - or indeed the traditional news - industry, for inspiration, stimulation and competition.

Being online is like having a shop in a mall - you have to keep up with everyone around you, even if they’re not a direct competitor. Otherwise you seem very tired, very quickly.

And in this Web 2.0 world there is an ever expanding army of new sites and services that surround us.

I found this image on Flickr - itself one of the pin-ups of Web 2.0 - and this is about half of the overall picture. There are dozens more logos to add to this.
Now, some of these companies have since folded; some have been sold for tens and hundreds of millions - but the overriding characteristics of Web 2.0 has been an explosion in online innovation. These are exciting times - we should count ourselves very lucky to be working in them.

Now, the first thing, you notice when you look at this is that not many of these logos look like newspaper mastheads. If this is a party - it would seem that we’re not invited .

Perhaps this is a simpler way to look at it. I know there are all sorts of definitions of Web 2.0 - but in my mind there are four key characteristics in the boom.

Social networks, search and aggregation, collaboration and video.
Again, the obvious point to make if you’re a newspaper looking at this - is that none of these would count as our core skills. That doesn’t mean we’re not doing them to some degree or other - but we have to concede that in pretty much all cases, they are being done better by someone elsewhere.

With Web 2.0 the web seems to have been moving away from us - making it harder than ever for us to compete. But compete we must.

Of course, only a small fraction of all of this related directly to news, but I believe there are a range of Web 2.0 innovations that are colliding to create a new world of online news - or what might crudely be called News 2.0.
The rise of blogging is often cited as a key 2.0 phenomenon, and . If we put to one side blogs which deliberately focus on personal trivia - what we see is often much closer to journalism than either side on the rather contrived blogging vs journalism debate will admit.

If we say the two key pillars of journalism are original reporting and informed comment - we have to accept that there are hundreds of blogs that fit the bill. In some cases, it is, admittedly, a little rough round the edges - but the essence of journalism is there.

All of the sites I’ve listed here are doing great work in their areas. If you work in my field, you have to read Rafat Ali’s excellent PaidContent.org, Jeff Jarvis’s Buzzmachine, or Scott Karp’s Publishing 2.0.

If you follow the cut and thrust of UK politics, you will find bloggers such as Guido Fawkes compelling reading. If you are a US liberal or democrat, the Huffington Post is now a must read for you. If you want celebrity gossip - and I have to admit that I very often do - you can’t go a day without Perez Hilton. The list goes on.

I think the real shift here is not about blogging versus journalism - but sheer volume of news sources available to us - and therefore the need for new tools to that improve the way that people find and engage with news and information from a wide range of sources.

A site like Newsvine, which describes itself as a ‘collaborative, social news site’ where a community of ardent news junkies debate what is happening in the world, linking to stories around the web, and vote on what the most interesting stories are.

Or we see it in a site like Daylife with intelligently aggregates news from around the web clustering related stories. For example an automatically created cluster around the Greek forest fires will link to an automatically created cluster of stories around George Papandreou, and so on.

We can also see this new news landscape in the canadian venture NowPublic which has recently received some $10m of funding and has tens of thousands of amateur citizen reporters covering news about their area or special interest. They are particularly good at extreme weather, reporting. There always seems to be a NowPublic reporter in the eye of the storm.

Or - we see it when a company like Newsgator launches an application that lets people get headlnes from around the world on their Facebook account and set up a news sharing network with their Facebook friends. Suddenly a site designed to let people show off their drunken antics to their friends becomes a news destination.
There are plenty more to add to this list, and I suspect there are still more launches in the pipeline. I have no idea whether any of these businesses will be with us in five or ten year’s time - but I suspect the functionality they are bringing to consumers very much will be - and will be an increasingly
important part of the way that millions of people experience news.

And, if I was starting from scratch - I would build a service like one of those above. And indeed, in time, depending on the myriad of priorities that any busy digital publisher has to deal with, our site will indeed feature many of the elements I have just shown you.

But are not starting from scratch. We are not working from a blank sheet of paper. We are not sitting in an office in Seattle or Silicon Valley with a handful of graduates plotting the next big thing.

We are dealing with the evolution of organisations that are committed to journalism; that survive on the reputation of telling people what is happening in the world every day of the year accurately and fairly; that bring a world view, a zeitgeist to the breakfast table, the train ride, to the desktop…
And, none of these organisations are really doing this.

The point is that the people on Newsvine need something to talk about. Daylife, Newsgator and even, on a larger scale Google news need something to aggregate.

The eyewitness accounts on NowPublic are compelling in their own right - but they need the other asset we bring - the skill of an editor to assess all the individual stories and decide what the story actually is.

People say news has become a commodity. I think that is a remarkably bleak and simplistic view of the world.

Yes, breaking headlines - the bear bones reporting of what is happening right this second has been commoditised as wire copy from Reuters and the AP has been made available to the public right the way across the net.

But original reporting and incisive, informed commentary - that uncovers stories others have missed or ignored; that makes the complex simple, and the abstract and remote human and real; and that does this every day across the broad spectrum of human interest, to a mass audience under a trusted brand - this is not a commodity. It is an increasingly rare and important skill.

And this is what we do. This is the role we play. We are the vital spark for conversation and debate. The source for a million links. A compass in an ever more complicated geopolitical landscape.

This is similar to the role we have always played - except now those conversations can be seen, measured. They take on a permanent life of their own - often on our own site; but often scattered around the net.
And, when you look at the sources most referred to by bloggers - as in this table from Technorati - you can see that it is heavily skewed towards traditional media sources.

We do remarkably well on this table - which is encouraging for us - I see it as one of the strongest indicators of our overall online health. It shows that above anything else in this landscape we are being talked about - and the greatest risk that any newspaper publisher faces in this new world is to be ignored.

None of us want to find ourselves in the business of creating carefully-manicured irrelevance.

The one thing I’d say though is that this doesn’t result in a huge amount of direct traffic for us. All the blogs on Google’s blogspot servers combined, for example, give us less than a third of one percent of our referrals in a given month. The business benefits are more subtle - but in the long term, just as potent.

The commercial cement that is holding all of this activity together is online advertising. We see here just a few of the long term forecasts for the market from earlier this year.

In case you hadn’t read, in the UK, online advertising is booming - even more so than the rest of the world. In the final quarter of 2006, online took some 14% of total advertising expenditure - the highest percentage in the world. Our online market was worth around £2bn or €3bn last year - and is forecast to double by 2010.

Around half of the market goes to search - but that still means that over the next year there is nearly £1bn of new online display revenue coming into the market - to put that in context, that is about the size of our entire print magazine advertising market. That is a considerable prize to fight for.

And fight we must. For all of the general cuddly, colaborative niceness about Web 2.0 - we also have to accept that another characteristic has grown: Google’s position as the web’s commercial engine room.

This is as true in the UK as elsewhere. The UK is Google’s largest market outside the US, and therefore is the only country to be declared separately. So we can see that in 2006, Google had 39% of the UK online ad market, and this year their UK revenues will top £1bn. As I’ve said - this is more advertising revenue than our entire consumer magazine sector, nearly double the UK commercial radio industry.

Google its impact on every sector of the economy’s attempts to grapple with the internet are undeniable - and the newspaper industry perhaps more than most. Some of us see as a competitor and a stealer of content; others see it as a source of traffic and revenue. It is a subject for a talk, or several talks on its own - but all I will say is that defining and understanding a relationship with Google and other search players and aggregators is a crucial part of operating effectively in the online world.

So if this mix of start-ups, blogs, aggregators, online advertising and Google is what we’re dealing with - the question is it and opportunity or a threat?
My view about the net has always been - the only way to make it an opportunity is to see it as one from the outset. If you see it as a threat, it will always be one.

And I think we have to look at this remarkable explosion that has happened in the online world over the last year and believe we can ultimately prosper as a result of it.

The internet is a growth market - but the only way to experience that growth is to embrace it wholeheartedly and hold on tight.

But it is going to be anything but easy - and I’m afraid that there will be many who don’t succeed.

Already, there are many who don’t share my optimism.
This is Neil Henry - the associate professor of journalism at Berkley, who has written a very eloquent book - American Carnival, describing as he sees it the decline of journalism as a result of new media.

And this quote - actually from an article he wrote in the San Francisco Chronicle title ‘The Decline of News’, sums up much of his thinking.
He goes on to say

“I see a world where the craft of reporting the news fairly and independently is very much endangered; and with it a society increasingly fractured, less informed by fact and more susceptible to political and marketing propaganda, cant and bias.

I see a world in which the pursuit of truth in service of the public interest is declining as a cultural value in our society amid this technological tumult; a world where professional journalism, practiced according to widely accepted ethical values, is a rapidly diminishing feature in our expanding news and information systems, as we escape to the Web to experience the latest “new” thing.”

In this article he went on to ask whether Google should “accept more responsibility for the future of journalism” and see it as its civil duty: “to somehow engage and support the traditional news industry and important local newspapers more fully, for example, to become a vital part of possible solutions to this crisis instead of a part of the problem?”

His comments were predictably rounded upon by various bloggers - perhaps this quote from a younger generation of journalist, Ryan Sholin, on his Invisible Inkling blog perhaps sums up the attitude best: “Get over it, professor”

Now, I’m being a teeny bit unfair to Sholin - this was part of a much longer post that covered a lot of issues. But it neatly captures the views and attitude of the web savvy corner of our industry when dealing with those such as Henry.

But, I have sympathy with both sets of views here.

Henry is not a luddite trying to force back the waves of technology. It is crude and unfair to use that awful rebuttal that he ‘doesn’t get it’. He can see a world he knows, and believes plays a critical part in democracy, being changed beyond all recognition - and in his view definitely not for the better.

Many of his observations are factual and accurate, but we have to move on from identifying the problem, and start trying to find the best solution for it.
Part of this is realising that somethings are simply not going to happen - no matter how much we might wish for them.

Now, I wish Google could go back to being a nice, cuddly search engine that does no evil, rather than a global advertising bohemoth. Or at the very least, I wish they had to pay big bucks to carry our headlines and first paragraphs on Google News.

I wish free classified sites would go away, or that the internet has recruitment advertisers rushing to spend more rather than less.

I wish there was a seamless way to get people to pay to look at our content that didn’t infuriate them, shrivel our audience and dramtically reduce the potential for advertising.

I wish all of these things - and frankly many more, but I also know they’re not going to happen. Or rather, some of them might happen - but it’s not worth holding your breath.

The point is - this is about change. Not a gentle, “start of the new school year”, kind of change - but disruptive, “shifting of tectonic plates” kind of change.

‘Get over it, professor’ isn’t quite how I’d put it - but it neatly capture the need for us to learn to deal with our new reality, rather than hope that it will simply go away.

It isn’t enough, however, to talk about change in some abstract sense. We have to detail what we are changing from and what we are changing to. And, I think there are four key areas that we have to deal with.

These are the change from publishing once a day, to publishing immediately and constantly. The change from being entirely UK focussed to having a global outlook; the shift from text and pictures to audio and video and this shift from Audience to community.

Each of these changes has its own evolutionary process within our organisation, starting from small experiments, before eventually becoming an engrained part of the way that we work. In all cases, we are talking about a process of continuous evolution - we will be moving into a new building next year, but even then the process of change along these lines will continue.

When we started on the web, plenty of people told us not to do breaking news - as that was better left to the BBC or to Reuters. Ignoring this advice was one of the best things we have ever done. Dealing with breaking news swiftly and reliably has been the foundation of our online success.

What started as taking an automated feed from the AP, turned into a few people tweaking and rewriting news stories, before evolving into the our web first policy last year, and is now resulting into a move to 24/7 working.
This is not a simple process.

But there is a real challenge in this - the tension between speed and quality and accuracy is being taken to new levels with the demand of the web. And, I suspect that tension is going to be a characteristic of how we operate for the forseeable future.

Everything we achieve on the web ultimately depends on the trust people put in our brand and organisation - and it is pointless if we start to undermine that in the wreckless pursuit of speed.

Our global reach is also something that has built up over time. Initially it was just a blip on our traffic figures - now it is not just a significant source of users, but the basis on which we have been able to raise the horizons of our entire operation.

Our short term focus here is in improving our offering for the US market. Depending on the month, we have about the same number of US users as we do from the UK - sometimes a bit more sometimes a bit less. There are, I should add, very different patterns of use between the two sets - those from the UK are much more likely to come directly to our front page, and tend to stay with us longer.

Those from the US are more likely to find us on Google, the DrudgeReport, Digg or The Huffington Post, they also tend to have a shorter dwell time.
We have now appointed a fantastic journalist as our US editor - Mike Tomasky, and we are beefing up our Washington Office. The initial impact on this is that we will be significantly improving our offer to the US market, and what is currently an interesting but relatively small revenue stream will grow accordingly.

The move to video audio and video has again been on the horizon for many years - and again is now becoming a major part of our future plans. Over the last few months, there has been more and more video appearing on our site - such as this film by our photographer Sean Smith who spent two months embedded with the US troops in Baghdad and Anbar province and produced a mesmerising set of reports from Inside the Surge.

We know we are not going to become CNN - but we also know that audio and video are going to be an integral part of our editorial output -and our commercial offering in the coming year.

So far, the changes have primarily been two dimensional extensions of what we do - whether we are filing at 4am or 4pm, whether we are workign in text, pictures audio or video, whether our audience is in the UK, the US or India - the underlying process involves us creating content and distributing it. It is all about how we tell stories.

But the move towards a stronger community element on our sites is really adding another dimension to us - it is something we cannot control as easily, but something that I believe adds value exponentially to our offering when we get it right.

When it goes well, it improves loyalty, gives our sites a human feel, and allows us to move from being . It is also the sort of experience that people just expect from anyone on the web.

To be honest, despite the fact that we have had community elements on our site since launch nearly a decade ago, we still have much to do here. But we are learning all the time.

It is now more than a year since we launched Comment Is Free - one of the most ambitious engagement projects launched by any newspaper.
Built around the bedrock of the newspaper’s comment - we have brought in dozens and dozens of new contributors; and each day we have hundreds and hundreds of comments. We don’t pre-moderate comments, but we do remove those that are abusive or potentially defamatory.

I would be lying if I said it had been entirely easy - perhaps the best way to describe it is to paraphrase the old nursery rhyme: when it is good, it’s very, very, very good - but when it’s bad, it’s horrid.

In the good bits, our readers demonstrate what brilliantly smart, witty and well informed people they are - and how well they know the Guardian.
The bad bits are well..I’m sure you can all imagine what the bad bits are. I’ll just say that , when you are dealing with debates around topics such as the Middle East not everyone can find it in them to be polite and eloquent.

However, like everything else this is evolving. We have made many changes since we launched, and we we will continue to evolve it so that we get more of the good, and less of the bad. Like so many things online, you don’t get this right by watching - you only get it right by doing it, and then continuously trying to do it better.

This wasn’t intended to be a presentation about the financial side of our activity - but I don’t think you can ever seprate the sort of change we’re going through without dicussing it. And the quick story is that our web business is remarkably strong.

Revenues are up this year by more than 50% - and we have been growing at this sort of scale for about the last five years. More importantly, so far this year, our total digital gains outweigh any decline we have seen in print advertising revenues.

I should stress this has not simply been a case of just turning up and counting the cash - we have had to be just as bold and creative in our commercial offering as in our editorial offering. These days our sales team is as likely to pick up an award as our editorial team. It is a result of a similar attitude: starting early; investing sensibly and continuously; and a committment to innovation.

So - bearing all this in mind, I remain an optimist - and to answer my original question, I see more opportunity here than threat from Web 2.0 - and the internet as a whole. I acknowledge that the change we are undergoing as in industry is sometimes painful - but, I feel, I firmly believe that those organisations who are willing to embrace the best that the web offers, who have a firm belief in their core purpose, and whose owners are prepared to absorb the uncertainties that the next few years will come out of that change flourishing - creatively and commercially.