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While newspapers fight to stay afloat, the Financial Times is doing just fine. In fact, the paper has almost doubled its subscription prices and has been charging for online content. John Ridding, the Financial Times’s CEO, recently talked to CJR’s Diana Dellamere about believing in your content, being confident in your readers, and creating strategies for a financial future.
Diana Dellamere: Most major papers are just beginning to dip their toes in the water of charging for online content, or have abandoned the idea after some experimentation with charging for premium content. The Financial Times has been charging for online content throughout it all.
John Ridding: For us, it’s been a little lonely out there. We’ve got a little flack for it, as if charging for journalism online is a crime. But now it’s some encouragement because more people are thinking like that. It’s necessary to get through this crisis and the relationship with publications is through the readership. What we’ve been doing has become more relevant.
DD: How was the Financial Times able to successfully raise subscription rates and charge for online content in the middle of what seems like a complete financial meltdown in the newspaper industry?
JR: I think this is a crisis and I think there is a lot of justified concern, but our position is that the concern shouldn’t be fatalism. There are things that publishers and publications should be doing and must be doing to come through this crisis. We launched a bit of a new strategy about three years ago which was basically building up content revenue. Developing new publications and products, both in print and online. Developing niches really–specialist areas around our core brand. That’s really helped us offset the decline in advertising.
A lot of publications are very fatalistic about their ability to charge. I accept that it may be easier for a specialist publication like the FT to charge, but I also think that other publications need to identify these opportunities, because it would be very hard to sustain an effective news organization without paid-for news content. And I think therefore that the challenge for publishers is to face the reality that advertising alone isn’t going to sustain a quality news organization. They’re going to have to find ways to provide content that they can charge for.
The answer is having confidence in the value of quality journalism, and we have that. Being confident that the readers will pay. And, in our experience, they will pay. We are seeing sustainable strong demand. In the information age, the idea that people won’t pay for information is really wrong.
DD: Have you seen different reactions, perhaps measured by subscription numbers or inward linking, to raising rates and charging online in various markets?
JR: Particularly in the U.S., there is a feeling that information should be free. But there has to be some balance there. Some stuff is free as an investment. That’s our perspective. Everything we do throughout our news organization and our publications is essentially global. The way our audience interacts and engages with us is pretty similar across the world, in terms of what they want from us. It’s interesting, the U.S. is pretty much our fastest growing market at the moment, [in terms of] people subscribing online. We have a lot of growth markets, but the U.S. is right at the top.
DD: The FT is driven in a certain sense by business and financial information, but there is also consistently high-quality global news reporting. If everyone goes toward becoming a niche publication, will that fall away? Or will the other news be supported by the content that people feel they need?
JR: Well, you can differentiate yourself by the kind of content, but also by the quality of your journalism. I think that it’s really just about making yourself different and distinctive. That gives you pricing power. It doesn’t have to be the whole publication. There is this idea of premium out there, where you can make part of the content free and then some premium chargeable content. There’s going to be a range of that business model and that will be different depending on the nature of the content.
Everyone needs to be exploring ways to charge for content. Our paid-for model is very flexible. You basically get three stories a month before you have to register and ten stories a month before you have to subscribe. I think works quite well for journalism. Some people just come for one feature story and that’s fine. But, if people come to FT.com they are likely to stick around and read more. And then register and maybe subscribe.
I think the next step for many publishers, and one that is very important for the industry, is micropayments. The nature of Internet consumption of news is that you may be driven to a Web site for just one particular story by a search engine. You may be willing to pay for that article, but you don’t want to pay for an annual subscription. But paying for that one story could be very significant for the business model.
DD: Would micropayments determine the type of content available in a given publication or overall? If every story has to pull its own weight, will some important stories not get written?
JR: This is a very interesting area. What it does enable you to do is have a more information about the traffic and reader interest. But, ultimately, our view is that the choice of what to cover and publish falls to the editors. We feel very strongly about editorial independence, and that is part of the overall business model. Readers want editorial judgment and editorial independence.
We will not be in a situation of editing by numbers. We have an extraordinarily experienced editorial team and it’s their judgment about what to write and the context around it.
DD: How much involvement do editors have in the business decisions?
JR: We are very fortunate that we have a good understanding on both sides of the business and editorial strategies. There is a very clear understanding of editorial independence, so we are very careful about that.
There is a very strong feeling on both sides that our entire strategy relies on the quality of our journalism. That is our pricing power.
There is a balance between content being paid for on the one hand and advertising reach on the other. Our concept of quality journalism as a paid-for model is actually very powerful for advertising, because they want personal engagement. And so the fact that people are willing and able to pay for the journalism of a powerful newspaper makes advertisers more willing to invest in the production of that journalism. So, it’s sort of a virtuous circle.
DD: Why did other publications not take this route of charging for content? Clearly, as the FT has demonstrated, advertisers have responded positively and readers are still willing to pay for the content. But peer publications have not been forceful about charging.
JR: Let’s be honest, I think it is easier for us to charge given our specialist nature. That has also caused us to return to focusing very clearly on global business reporting.
More fundamentally, though, there has been this sort of context around the newspaper industry that has emphasized reach rather than quality. Media has been measured by how broad you reach rather than what return you get, and that’s the mindset that has been quite damaging. But for a while it has been rather urgent to focus on the return you get from your circulation rather than the reach.
DD: How can that mindset be changed? How can the industry get back to a paid or hybrid model?
JR: I think the later it gets the harder it gets. Clearly, the fall of advertising that we’ve seen has given the industry a sense of urgency. It’s really about the rate of change. A lot of these publications have been around for a long time and the business model is very deeply entrenched, and so it’s hard to change quickly. But it is necessary to change quickly.
DD: What role will technology play in this change? Are mobile and handheld devices important to this change?
JR: I think it is a very interesting and potentially important area. I think we have been one of the biggest sellers pretty much every month on the Kindle, which is surprising and encouraging for us. We have also signed an agreement with a company bringing out a new device early next year.
I’m a believer in newsprint, I think newspapers are going to be around for quite a while. But I think there is going to be a spectrum of devices–whether it’s mobile phones, or iPhone applications.
Our philosophy and strategy is to be channel neutral, and it should be up to the reader. We should be channel neutral or channel agnostic. And with our readers, its not just one device, it’s several. The media industry as a whole has been quite often traumatized by technology, but there is tremendous opportunity to deliver journalism in a very cost effective way and to engage with your readership in a much deeper way, whether through having them post comments or talk with journalists or being able to measure and track content. It’s a very powerful distribution channel.
Technology also it allows you to do things we could never do before. An important part for us is video. We’ve been doing a lot of video. I’ve been at the FT for twenty-two years, and when I joined it would never have ever occurred to me that we would do video, but now it’s a very important format for us. It opens up the audience and reach. It also gives us access to TV budgets, which we never would have been able to tap before.
DD: What are the challenges of tailoring content to various channels? Does that create any tension with the idea of maintaining quality as the primary source of pricing power?
JR: I think you do need to be sensitive to the particular format. You can’t necessarily take the same piece of text and transform it to a digital context. But that’s where the editorial team has been so enormously important. Then there are also multi-channel journalists who are comfortable in print, on video, online.
I think it is important to remember what the essential qualities of the publication are. The reader or viewer is still getting exclusive access and information.
DD: With a readership that is quite sophisticated, could the readers start producing their own form of journalism? What would be the difference or the extra value of professional journalists?
JR: We have a very engaged and well-informed audience that really knows what’s going on around the market, and they create very lively content for us. And that has been very good for us.
There is the potential for actually incorporating user knowledge and feedback. We just have to be careful that the readers know what they’re getting.
David Simon put it very well in his CJR piece: journalism is a craft. I think there is absolutely a role for citizens in journalism, for ideas and comments, and knowledge criticism and forms of non-traditional journalism.
But that’s fundamentally different from professional journalism. This is a trade that’s based on experience, and a sometimes subliminal and invisible trait that you get from being a reporter for many years and understanding the way it works; building up your network of contacts you can trust and being able to articulate that in journalism.
A really good journalist inevitably becomes a specialist in a field, and they are able to communicate relevant knowledge more effectively than people who don’t have that journalistic training and instinct.
There is an important craft to quality journalism that needs to be sustained, protected, and developed.
DD: Are there any big upcoming future plans for the FT?
JR: One of the main challenges for us is really increasing the speed of innovation and product development, and becoming agile and quicker to react. And it never stops. We’re pretty pleased about the way that’s gone. We’ve been doing a lot of video, cell phone and iPhone apps, and readers. It never stops.
We are working on a financial wiki to keep our readership engaged. Financial markets are getting more complex and it is valuable to provide a trusted voice to make sense of it all–but also to have the readers, who are professionals in this area, being involved and providing information to each other. To develop that link with our readers will really be quite useful.
DD: Are decisions about these changes being made internally, or by some external consulting firm?
JR: You’ve got to get the balance right. It’s an internal experience to figure out how to articulate the brand that’s been around for 121 years–which is pretty much the most valuable thing we’ve got, really. We have to make sure we are developing products that are very much maintaining the spirit of the brand.
There is a challenge to make sure you have a strong business model for the existing business, but there’s also an opportunity to build new franchises. We won’t launch anything unless we are very comfortable that is upholds our quality. What we can’t do is get carried away with every fad. We have to keep focused on producing the quality products that we have and that suit our model and readership best.
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