Felix Salmon

The impossibility of tablet-native journalism

Felix Salmon
Dec 3, 2012 17:05 UTC

The Daily has reached the end of its life: as News Corp splits in two, its losses, which might have been manageable within the current behemoth, would have loomed far too large in the smaller spinoff.

The news is not particularly surprising, but it would be wrong to simply dismiss it as a Murdoch folly which holds few lessons for anybody else. Rather, I think that The Daily has taught us all an important lesson — which is that tablets in general, and the iPad in particular, are actually much less powerful and revolutionary than many of us had hoped. Specifically, far from being able to offer richer content than can be found on the web, they actually find themselves crippled in unexpected ways.

News apps, it has become clear, are unwieldy and clunky things. Every issue of a new publication has to be downloaded in full before it can be opened; this takes a surprisingly long time, even over a pretty fast wifi connection. That’s one reason why web apps can be superior to native apps: no one would dream of forcing people to download a whole website before they could view a single page.

On top of that, the iPad’s native architecture is severely constrained in many ways. Look at any publication you’re reading in an iPad app, and search for a story. Oh, wait — you can’t: search is basically impossible within iPad apps, which at heart are little more than heavy PDF files, weighed down with multimedia bells and whistles. Navigation is always difficult and unintuitive, and pages are never remotely as dynamic as what we’ve become used to on the web. This wasn’t The Daily’s fault. Again, take any native iPad publication at all. Read to the end of a story, and then see how many headlines you can click on: which stories are you being given the choice to read next? The answer is probably none, and again the reason for that is built deep into the architecture of the iPad, and of other tablets too.

When the iPad was first announced, there were lots of dreams about what it could achieve, and how rich its content could be. But in hindsight, it’s notable how many of the dreamers came from the world of print. Web people tended to be much less excited about the iPad than print people were, maybe because they knew they already had something better. The web, for instance, doesn’t need to traffic in discrete “issues” — if you subscribe to the New York Times, you can read any story you like, going back decades. Whereas if you subscribe to a publication on a tablet, you can read only one issue at a time.

I’m reminded, here, a bit of Apple’s iOS Maps debacle. Compared to old-fashioned static maps, Apple’s maps are amazing. They also come with clever 3D views: an impressive bit of technological gimmickry which doesn’t add a huge amount of real value. But while Apple was working on rendering technology, Google was incrementally improving its own maps in much more useful ways, employing a huge team to add vast amounts of rich data every day. The result was that by the time Apple’s maps launched, they were inferior in most ways to Google’s alternative.

Similarly, when the iPad launched, it allowed people to do things they could never do with a print publication: watch videos, say. But at the same time the experience was still inferior to what you could get on the web, which iterates and improves incrementally every day. The iPad then stayed still — the technology behind iPad publications is basically the same as it was two years ago — even as the web, in its manner, predictably got better and better. No iPad publication is remotely as innovative or as fun to read as, say, BuzzFeed, because BuzzFeed has coders who can do very clever things with their chosen platform, and iPad publications don’t. If you’re publishing on the iPad, you’re basically a designer rather than a coder, and you’re far more limited in what you can do. This kind of thing, for instance, works OK in Safari for iPad, but you won’t find it in a downloaded publication.

One of the things that confused me, when The Daily launched, was the way in which it failed to leverage the wealth of rich and valuable content available within News Corp. You couldn’t watch episodes of The Simpsons, you couldn’t get access to amazing footage from Avatar, you couldn’t read exclusive extracts from HarperCollins books. Murdoch was happy to spend a large eight-figure sum on building custom-made content for the new publication; he even shelled out for a Superbowl ad. But he never managed to use The Daily as a means of bringing his company’s already-existing content to life in new ways for a new platform, and I suspect that iPad constraints are part of the reason.

Tablets, it turns out, are a great way to consume content which was designed for some other medium, like books, movies, and videos. But weirdly, magazines and newspapers are having a harder time of making the transition: there are many books I prefer in electronic format, but there isn’t a single magazine or newspaper which I’d rather read on the iPad than on paper.

The promise of the iPad was that it would usher in a rich-media world combining the versatility of the web with the high-design glossiness of magazines; the reality is that it fell short on both counts. The Daily was Rupert Murdoch’s attempt to get a head start in the new medium, but in this case the medium simply isn’t good enough to get traction: the only iPad-native content which has worked really well has been games.

As far as news and journalism are concerned, the verdict is in: tablets aren’t a new medium which will support a whole new class of publications — there’s almost nothing you can do well on a tablet that you can’t just put on a website and ask people to read in a browser. Publications of the future will put their content online, and will go to great lengths to ensure that it looks fantastic when viewed on a tablet. But the tablet is basically just one of many ways to see material which exists on the internet; it’s not a place to put stuff which can’t be found anywhere else.

Rupert Murdoch is quoted in today’s press release as saying that “The Daily was a bold experiment in digital publishing”, and he’s right about that. Someone needed to see whether there was such a thing as tablet-native journalism, and Murdoch took that role onto himself. The answer, it turns out, is no. But we didn’t know that when The Daily launched in 2010. Now we do.

Update: Some good responses in the comments, and also from Ben Jackson.

Update 2: Gruber weighs in, and of course is a must-read. I’m going to revisit this subject, after doing a bit of homework. But to make one thing clear: I’m not saying that there’s no such thing as a good tablet news-reading experience. I’m saying there’s no such thing as good tablet journalism: that is, journalism made for the tablet specifically. If you take, say, an old-fashioned long-form text story, there are ways to make it a joy to read on tablets. (Just like books can be a joy to read on tablets.) But there’s nothing tablet-specific about that. If you look at something like Marco Arment’s The Magazine, the app is lovely, clean, and lightweight. But it doesn’t take specific advantage of the tablet format to do the kind of journalism which can’t be done in a different medium.


I had a look Ev Williams’s tablet-based Medium. I can’t figure out if it’s insufferably twee, or the next best thing, or possibly both. Still, it’s interesting.

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Is stock-picking just another hobby for men?

Felix Salmon
Nov 28, 2012 20:55 UTC

I had a fascinating lunch, a couple of weeks ago, which lodged in my mind the idea that stock picking, at least when practiced by individuals, is best analyzed as an upper-middle-class hobby rather than as purely profit-focused investing activity. Once you start looking at it that way, suddenly a lot of behavior, which looks irrational under most lights, starts making a lot of sense.

For instance: subscriptions. These things are serious money-makers, whether they’re old-fashioned newsletters, whether they’re Barron’s subscriptions ($149/yr), or whether they’re slightly more high-tech products like the various subscription products at thestreet.com (between $152/yr and $1,040/yr), Minyanville (between $499/yr and $899/yr), or, now, at Seeking Alpha ($2,388/yr).

These prices aren’t always completely transparent (good luck trying to find the Minyanville prices on their website, for instance), but they’re high for a reason: they’re sending the message that the subscriptions are meant to make you money. At the same time, however, if you compare these sums to the sort of money that the upper-middle classes spend on, say, golf, then they don’t look quite so large. A golf habit is unlikely to cost you less than $5,000 a year, and can cost tens of thousands, not including the extra amounts that many people pay to buy real estate on the golf course.

What’s more, the number of golfers in America is significantly larger than the number of stock-pickers. This is a niche market, which means again that prices need to be high: you’re never going to sell millions of subscriptions to anything.

One thing worth noting here: stock picking, even more than golf, is an overwhelmingly male hobby. Put aside all the mathematics about how individual investors consistently underperform the market and pay enormous fees to various financial-service middlemen; all you really need to know is that if something is done only by men, it probably isn’t particularly sensible.

Still, the Seeking Alpha model is an interesting one: they’re basically crowdsourcing their subscription product, by offering their contributors between $100 and $500 per article (or more, if the article gets lots of page views), if they consider the post high-quality enough to qualify for the Seeking Alpha Pro product.

You can do the math: Seeking Alpha says that it wants to feature five “Alpha-Rich” articles per day on its pro site, for which it will pay $500 apiece. Let’s say it also features a couple of dozen Pro articles at $100 a pop: that adds up to an editorial budget of $5,000 per day, or about $1.25 million per year. Divide that by $2,388, allow some budget for in-house editors and the like, and the product looks like it will break even once it gets to about 600 subscribers. Which is not all that many, considering Seeking Alpha gets about 4 million visitors per month from the US alone.

I would never recommend any stock-picking subscription, just as I would never recommend stock-picking. But the Seeking Alpha model is quite a clever one: the articles are behind a paywall for 1-3 days, then they get opened up to the public, where they can accumulate a decent comment stream and give the author (as well as the subscription product) the oxygen of publicity. After that, they go back behind the paywall, because even old analysis is valuable when you’re dealing, as Seeking Alpha wants to do, primarily with undercovered small-cap stocks.

What’s more, it stands to reason that a crowdsourced product is likely to provide more value than product with just one or two authors: no individual can come up with that many insightful ideas, and Seeking Alpha Pro is able to prominently feature ideas from contributors who might only have one or two great analyses per year.

Still, the ultimate value of any such product is ultimately likely to be negative rather than positive, if only because once you’ve paid for it, you’re going to want to act on it. And the minute you start trading stocks on your own, you become the dumb money.

How much is the real cost of a subscription, then? The $2,388 a year is just the up-front cost, but on top of that you need to layer on your trading fees and your general underperformance. What’s more, if you’re subscribing to Seeking Alpha Pro, you’re probably subscribing to other products, too. Call it $5,000 a year, all-in.

Which is actually not that much, compared to other hobbies: I know people who can spend $5,000 on a single bicycle. If you’re into classic cars, $5,000 is nothing. And similarly, if you’re skiing or flying around in small planes or even just taking a luxury vacation once a year, $5,000 can be a relatively modest sum for a reasonably affluent person. And none of those hobbies come with the extra thrill of dreaming that they could end up being highly profitable.

One thing I would note, though: from a financial-media perspective, you’re limiting yourself enormously if you spend too much time chasing that small group of hobbyists — especially if you’re not trying to sell them subscriptions. Look at the enormous number of websites which put stock tickers next to company names, so that the hobbyists can see exactly what the stock in question is doing that day. It makes the site seem as though it’s targeted at silly males, rather than at a broader, smarter audience.

As a rule: if you want to attract women (and most men for that matter) as well as the stock-picking men, get rid of those tickers and sparklines and constant reminders of what the market did today. Most of the hobbyists are perfectly capable of reading a news article about Apple without being told what the company’s ticker symbol is. But the rest of us find such things incredibly annoying.


Sound investing is easy. Buy quality, let it ride.

Stock-picking is devilishly hard. Keeps me humble! HPQ anyone? :)

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The FT backs down on paywalled blogs

Felix Salmon
Nov 13, 2012 23:42 UTC

Back in mid-2010, the FT’s Money Supply blog disappeared behind the FT paywall, with promises that it wouldn’t be the last. From the top on down, the general attitude at the FT has been clear: the idea that the FT should publish information for free is “an absurd notion”, and given that the FT’s blogs are part of its high-value content, there’s no reason why they, too, should be free.

The problem was always that the FT’s best blog — representing a large chunk of its most valuable and highbrow content — was its Alphaville flagship, which consistently fought tooth and nail to remain free. Alphaville is incredibly good at reaching the leaders, especially in the US, that the FT desperately wants to reach even if it can’t persuade them to buy a subscription. And with Alphaville free, it was hard to put the FT’s other blogs behind the paywall.

So 2011 came without any new paywalled blogs, and then 2012. Finally, today, in a comment, Alphaville’s Lisa Pollack has announced the FT’s retreat from the whole idea. “The Powers hath spoken,” she writes: “Money Supply will be made consistent with the rest of FT blogs.” Which means that it will be free, at least in monetary terms.

There’s a quid pro quo, though: if you’re not paying in money, you’re going to pay in terms of personal information. From November 19, all FT blogs, including Alphaville, will reside behind the FT’s registration firewall: if you haven’t registered, you can’t get through. The idea is that if the FT knows who you are, it can target its ads better, and get more money for them.

The registration-wall compromise is an interesting one, and seems to be happening with much less fanfare than we heard in 2010, when the paywall went up. If the FT wanted, it could paint this as part of what you might call a ziggurat model: the first couple of articles you read each month are completely free, and then there’s a blog layer which is free with registration, and then there’s a newsier layer which costs a certain amount of money, and then there’s the Lex layer on top of that, which costs even more, all the way up through the high-dollar newsletters and even the subscriptions to services like Medley.

But it’s hard to square a rich free-with-registration layer with the FT’s stated philosophy that if its content is of value, then it should not be free. There are basically two choices here, both unpalatable to the FT. One is that the blog layer effectively institutionalizes the FT’s blogs as a kind of ghetto, and implies that the content on the FT’s blogs is somehow less valuable than the rest of the FT’s content. Alternatively, and more worryingly for the FT’s model, it implies that genuinely web-native content, with links and comments and interaction and everything else we’ve come to love over the past decade or so, is almost impossible to pull off behind a paywall, and that if and when all FT journalism starts embracing such methods, the newspaper’s model is going to run into serious difficulty.

My view is that both are true — at least so long as the FT refuses to follow the NYT and allow free access to people following links from social media or other websites. As long as millions of people hit the FT’s paywall every month, it’s basically turning away the very readers it should be attracting — including, incidentally, a lot of subscribers who get perennially annoyed when they too hit the paywall. The world of online information is becoming fragmented by social media, and people simply don’t read the FT the way that the FT wants them to read the FT: by navigating to the home page and then reading through stories which interest them. They want to talk about stories with their peer groups, and there are very, very few people out there who can comfortably assume that most of their peer group has an FT subscription.

So there’s a big long-term external problem with the way the FT’s paywall is set up — and it helps to create an internal problem, too. So long as the news side rather than the blog side is the part of the business which is bringing in subscription revenue, the FT will overvalue the news side and undervalue the blog side — no matter how important or valuable the journalism produced by the blog side. The result is bloggers who feel underappreciated, and who get the clear message that they should move over to the less web-native news side if they want to climb the FT career ladder.

All that said, it’s still good news that the FT has finally decided to retreat from its decision to paywall its blogs — a decision which was always born more out of ideology than of practicality. I just wonder what’s going to happen if and when the rest of its news hole becomes bloggier, as is happening at all major news organizations.


Mr Clark, there are micropayment solutions for online publishers, and they work very well — better than paywalls. Most publishers and journalists fear them, however, as they allow the readers to chose and reward their favorite authors. With that comes “commercial accountability,” the last things a journalist wants.

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The FT in play

Felix Salmon
Nov 6, 2012 23:46 UTC

This will come as a surprise to absolutely no one, but the Financial Times is going up for sale, according to Bloomberg, with an asking price of £1 billion. (Pearson has denied the story, in less than convincing terms.)

That’s big number. Here’s the back-of-the-envelope: the FT Group made £22 million in the first half of this year, so £1 billion would be roughly 23 times earnings. But the FT Group includes 50% of the Economist, which is highly profitable, as well as Medley Global Advisors, Mergermarket, and sundry other bits and pieces. I’m not entirely sure why Pearson would want to hold on to those things after selling off the FT, but the report is that it’s the newspaper, rather than the Group, which is for sale. (Maybe Pearson reckons it can fetch more by selling the Group off in parts than it could selling the whole.)

Pearson hasn’t said whether the FT is profitable on a standalone basis, but if it does make money, it doesn’t make much. There is lots of value in the FT brand, but it’s not the kind of value you can compute with a DCF analysis. Whoever buys the FT will not be doing so in the expectation that it will pay for itself through profits: to the contrary, I fully expect any acquirer to spend a substantial amount of money investing in the FT over and above the purchase price.

Up until now, Pearson has had a strategy of trying to maximize cashflow from the FT: it charges enormous sums for subscriptions, and generally behaves as though it wants to extract the maximum amount of money from the newspaper before the franchise dies. The strategy was once explained to me in very simple terms: that it would be downright embarrassing for a newspaper called the “Financial Times” to be a money-losing operation. As a result, the FT does everything it can to maximize profits, even if that means reducing the value it provides to subscribers. (Everything from Lex to China Confidential, for instance, gets its own surcharge, making a lot of FT content off-limits to people spending $350 per year or more.)

It is unlikely that the FT’s new owner, if and when the paper is sold, will take the same approach. After all, the current strategy will never generate $1 billion of value: that’s why Pearson is being sensible by selling rather than holding. Here’s how Michael Lewis explains it:

The right price to pay for a newspaper is a bit like the right price for a sports team or a work of art: whatever some rich person is willing to pay. And as profits dwindle, that rich person is paying less and less for the cash flows, and more and more for the cachet…

There’s a word for an investor who clings to an asset whose chief value, its cachet, is of virtually no value to them: insane.

Pearson loves to repeat that “the FT is a valued and valuable part” of the company, but there’s a good reason why public, listed companies tend not to own things like sports teams or works of art. For that matter, Pearson is one of very, very few public companies which own newspapers and which don’t have a dual-class share structure giving control of the company to some mogul or family. The buyers might not be doing DCF math, but the sellers do it all the time, and the value of $1 billion to Pearson is vastly greater than the present value of the FT’s future cashflows would ever be.

The new owner, of course, will want to get $1 billion of value out of his investment, but he won’t be trying to get there by using the FT’s current playbook of constantly raising subscription rates. That, along with its paywall paranoia — the determination with which it attempts to prevent non-subscribers from reading all but the tiniest amount of FT content — means that it is actively repelling the population which is its best chance at future growth and relevance.

The FT loves to tell advertisers that it reaches lots of very rich and important high-level executives, which is true. Newspapers sell readers to advertisers, and those executives are where the money is right now. But they’re not where the money will be, in say a decade’s time. When Rupert Murdoch bought the WSJ, I expected him to turn it into a formidable global brand, especially in China; instead, he invested millions in a new section devoted to New York City. It turns out that Murdoch’s desire to compete with and beat the NYT is greater than his desire to invest in an ultra-long-term project which would probably only pay off after he was dead.

But there are two huge global news companies which are desperate to make inroads in China and other fast-growing countries: they have an enormous strategic interest in reaching the next generation of global technocrats, and they know they can’t do that with terminals alone. They need something which can travel more easily, something with a first-rate reputation: a foot in the door, if you will. To Bloomberg and Thomson Reuters, the value of the FT is not in its profitability, but rather in its reach and its reputation. It’s one of the very few possible ways of reaching the people who will be running the world in 10 or 20 or 30 years’ time — no matter what country they currently live in.

The FT isn’t there yet: it’s still far too reliant on its UK business-news monopoly. Articles like “Foreign demand in London boosts Telford” only really make sense in a physical newspaper read on commuter trains into the UK capital, but we’ll keep on seeing them, so long as that physical newspaper is attractive to a lot of UK advertisers. For all that media executives love to talk about globalization, the fact is that for the time being there’s precious little genuinely global advertising, and there’s still more money in UK print ads than there is in glossy B2B online-branding campaigns aimed at international business executives.

And there’s another inconvenient fact for would-be acquirers of the FT: journalism doesn’t have economies of scale. The bigger that journalistic organizations become, the less efficient they get: salaries rise, new layers of editors and managers appear, and per-person budgets grow all everywhere, for everything from IT to travel expenses. Journalism is a world of diminishing returns: size matters, but it’s also very expensive. If the FT was absorbed into a much larger organization, its editorial budgets would end up rising even before the new owners started investing money in putting reporters all over the world, building the foundations for future relevance.

The Bloomberg story does mull the prospect that the FT could end up being a vanity purchase for a billionaire “from Russia, the Middle East or Asia”; this is possible, but my guess is that it’s unlikely. For one thing, Michael Bloomberg and David Thomson are just as rich as anybody who might think about putting themselves on the list, and they actually know how to make money out of news. And on top of that, Pearson wouldn’t just sell to the highest bidder: they might be a public corporation, but that doesn’t mean they’re completely insensitive to the optics of these things.

The most intriguing part of the Bloomberg story, for me, is the bit where it says that Thomson Reuters may decide not to make an offer. That would be sad: I would love to have the FT’s amazing roster of journalists in-house here at Reuters, although of course all such decisions are vastly above my pay grade. (It should go without saying, but I’ll say it anyway: no one here ever tells me anything, and you should probably believe the opposite of what I say.) If Thomson Reuters decides not to get into a bidding war, that would surely have a huge effect on the dynamics of any negotiations. But ultimately, the FT belongs in a media company, not at Pearson. And although it might take a while to get there, that will almost certainly happen at some point during the tenure of Pearson’s incoming CEO, John Fallon.


Seems out they wouldn’t have sold Penguin outright as well.

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Magazines vs digital startups

Felix Salmon
Oct 22, 2012 06:01 UTC

Simon Dumenco has a question: would you rather own a magazine, or a digital startup? He notes that some magazines are making real money these days, including Marie Claire, even as most digital startups fail. Old Media isn’t sexy, he says, but “a lot of magazines continue to be not only damn good businesses, but are doing better than ever.”

I don’t know about the better-than-ever thing: I’d need to see some numbers before I was persuaded on that front. At any given point in time, statistically speaking, some small set of magazines is going to be having a record year. But in aggregate, ad-supported magazines — which are the magazines Dumenco’s talking about — are ultimately in the business of attracting the attention of readers, and then selling that attention to advertisers. These days, there are more demands on our attention than ever, and they are more convenient than ever. If you have some time to while away , you can still read a magazine. Or, you can pick up your phone, and play Angry Birds, or check your email, or Twitter, or Facebook, or, well, I’m not telling you anything new here.

As a long-term investment, then, I’d be worried about owning a magazine, no matter how profitable it might be today. The fashion books will probably last longer than most, although as their audience spends less time with magazines and more time on Pinterest, inevitably they won’t be able to charge quite as much as they used to for that audience’s attention.

In terms of short-term cashflow, on the other hand, it’s no contest. Digital startups are designed to burn all of their revenues and then some: if you’re making money every quarter, you’re doing something wrong. So if, like Dumenco, you’re looking primarily at current profitability, the choice is clear: magazines will always win that fight, even unto their dying day.

If you’re the kind of owner who likes old-fashioned things like owning a profitable enterprise, then, there’s a decent case for sticking with ink on paper. If you own a digital startup, the chances are that it will lose money either until it goes bust, or until you sell it. But at that point, of course, you could make a fortune.

There are a handful of people who have turned digital media properties into steady money-spinners; Nick Denton springs to mind, and the reason that the Bleacher Report sold for $180 million is just that it was extremely profitable. But Dumenco’s talking about how the press likes to “treat venture capitalists like rock stars”, and venture capitalists aren’t in the business of cashing quarterly dividend checks. The big difference between VC owners and the rest of us is that VC owners expect their companies to lose money. That, in many ways, is their big competitive advantage: they’re sitting on enormous amounts of money entrusted to them by their investors, and it’s their job to spend that money in a no-holds-barred attempt to build the most valuable companies they can. Until, after five or ten years, they have that glorious exit.

What happens after the exit? Well, the company isn’t a startup any more, that’s for sure. And by that point the VC owners are on to their next thing. It’s not their job to build some great eternal franchise like, say, Vogue: they don’t have that kind of time horizon. In any case, the digital world moves so fast that there’s really no such thing as an eternal franchise any more.

The simple answer to Dumenco’s question, then, is this: what kind of owner are you? Do you mark your holdings to market, and reckon that you’ve made money if your company is worth more this year than it was worth last year? Or do you instead want to own a property which makes a lot of money, and which can continue to support your lavish lifestyle indefinitely, just by dint of the profits it makes? Similarly, do you like to take risks, or is it more important to you that the assets you own preserve their value over time?

But of course things aren’t as simple as that. Just look at Variety, which Reed Elsevier recently sold for $25 million, after previously turning down offers as high as $350 million. Or look at TV Guide, which went from being worth billions to being worth nothing at all over the course of two tumultuous decades. Newsweek is not alone in “going to zero”, as the financial types have it: Dumenco might be happily handing out awards to Food Network Magazine, but he sure isn’t giving out any gongs to Gourmet, which was unceremoniously shuttered in 2009, along with a magazine — Modern Bride — which was pretty much nothing but ads. And I myself worked for Condé Nast Portfolio for nearly all its two-year existence, during which time it managed to burn through something on the order of $100 million. Even digital startups don’t generally lose money that quickly.

The fact is that owning a magazine is a risky proposition. It might not be as risky as owning a single digital startup, but by the same token owning a stable of magazines could well be riskier than owning a portfolio of startups. Silicon Valley types love to moan about how difficult and expensive it is to hire good engineers these days, but the cost of running, printing, and distributing a national magazine dwarfs the costs of any startup not called Color. And what’s more, most of those costs are fixed, not variable. The economics of magazine publishing are ruthless: if your revenues exceed your costs, then any marginal money you bring in is almost pure profit. Which is why profitable magazines tend to be very profitable. But if your revenues are lower than your costs, it’s incredibly difficult to cut back, and you’re probably doomed.

My answer to Dumenco, then, is that given the choice, I’ll choose the startup. Just look at his winners, this year: they’re all worthy awardees, I’m sure, but there’s no one on the planet who could have predicted even a few years ago that Harper’s Bazaar, Allure, and Traditional Home were particularly well positioned for this kind of glory. There’s something scary and random about the magazine industry — and in the world of magazines, failure hurts, much more than it does in Silicon Valley, where it’s a veritable badge of pride.

I’m not saying that print is dead: it isn’t. That said, it’s definitely showing symptoms of old age and decline — and all those high-tech pill bottles labeled “mobile strategy” or “native advertising” aren’t going to change the underlying diagnosis. Venture capitalists don’t mind pouring money into digital startups, because the value of those startups, if things go well, will rise ten dollars for every dollar the VC spends. That’s an attractive business to chase. In the magazine industry, by contrast, it’s still very much possible to make profits. But how much is your magazine worth? If you make $10 million a year, but the value of your magazine is $40 million lower each year than it was the previous year, you’re not in a good position.

Moreover, what happens if you do fail? The failed magazine publisher has a dim future indeed; the failed digital-startup visionary is immediately showered with new opportunities.

I’m no great fan of VCs, while I’ve been a lover of magazines all my life. But the overwhelming majority of my media consumption these days is digital, and magazines in general are beginning to seem a bit slow and uninspired. I go to the airport newsstand because I know I’ll be asked to turn my electronic devices off — and even then, more often than not, I end up buying nothing.

All the magazines I’ve had over the years have had some kind of “wow” factor — something which made them seem a few steps ahead of wherever I happened to be. I still get that “wow” factor today — but I get it almost entirely online. The age of the magazine is coming to an end, slowly; the age of digital is only in its infancy. And that is why, Simon, the uncertainties of digital ultimately trump the storied legacy of print.


It’s worth noting that the decline of general-circulation magazines became noticeable well before web publishing became a significant factor. Newsstand sales fell rapidly during the early 90s and paper and postage costs escalated. Some were being affected by the changes in the mass-market distribution system (i.e., to supermarkets and drugstores) that was decimating the paperback book business.

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Why keep Newsweek on life support?

Felix Salmon
Oct 18, 2012 14:28 UTC

It’s hard to make money in journalism, and even harder to make money in print journalism. But here’s what I don’t understand: invariably, every time a print publication fails, it announces that it’s not going to die, it’s just going to “transition to an all-digital format”. Newsweek, of course, is no exception. But this is supposed to be the clear-eyed, hard-hearted world of Barry Diller:

If doesn’t work out? Move on! “Sell it, write it off, go on to the next thing,” he says.

Once upon a time, Newsweek was a license to print money; from here on in, it will be a drain and a distraction. Merging it into the Daily Beast never made a huge amount of sense, and now it’s being de-merged: instead, its journalism “will be supported by paid subscription and will be available through e-readers for both tablet and the Web”. Some of it, I guess, will be syndicated to the Daily Beast.

The chances that Newsweek will succeed as a digital-only subscription-based publication are exactly zero. If you had a team of first-rate technologists and start from scratch trying to create such a beast, you’d end up with something pretty much like Huffington — which lasted exactly five issues before bowing to the inevitable and going free. There’s no demand for a digital Newsweek, and there’s no reason, either, to carve off some chunk of the NewsBeast newsroom, call it “Newsweek”, and put its journalism onto a platform where almost nobody is going to read it.

What you’re seeing here is, basically, path-dependency. If Barry Diller were given the Newsweek brand on a plate, he would never invest in turning it into some kind of subscription-based digital-only operation. The opportunity costs alone are too big: the same money, invested in the Daily Beast or in some other property with a chance of succeeding in an increasingly social world, would surely have a much higher probability of generating positive returns.

Instead, Newsweek is hitching its fortunes to a motley group of e-readers (Zinio!), all of which are based on pretty clunky old publishing technology, and none of which have any ability to take advantage of the social web. Magazines are dying, and millions of people are buying tablets and e-readers: that much is true. But I simply don’t believe that Barry Diller and Tina Brown really think, in their heart of hearts, that they have the unique ability to build the world’s first successful subscription-based tablet-first publication where so many before them have failed. Especially not when that publication is forced to bear the legacy “Newsweek” name.

Brown, remember, killed off Newsweek.com as soon as she took control of the magazine: she decided that while the brand had some kind of meaning in print, the digital future belonged to the Daily Beast. With today’s announcement, she seems to be attempting some kind of freemium strategy: give away the Beast for free, and then charge for the, er, premium content in Newsweek. The problem being, of course, that the whole point of merging Newsweek with the Daily Beast was that in an online world where nothing is more than a click away, Newsweek content isn’t more valuable than anything else. That’s certainly not going to change after today’s layoffs.

All of which is to say that today’s announcement (the “all-digital” bit, that is, not the killing-off-print bit, which was simply inevitable) is basically an exercise in face-saving. When it comes to the optics, it’s always more respectable, more techno-visionary, to do something new and digital than it is to simply close down and write off a failed acquisition. Newsweek’s journalists have already been incorporated into the Daily Beast newsroom: shutting down the printing presses and moving on would simply be recognizing the reality of a world where neither Sidney Harmon nor his family wants to subsidize the magazine any more.

Instead, Newsweek is going to have to suffer a painful and lingering death. There’s no way that first-rate journalists are going to have any particular desire to write for this doomed and little-read publication, especially if their work is stuck behind a paywall. At the margin, it will certainly be better to work for the Beast than for Newsweek: the supposedly “premium” arm will in reality be the bit which smells like old age and irrelevance. It’s not going to work. So, really. Why even bother?


Excellent piece. I would love to hear you elaborate on your statement that “in an online world where nothing is more than a click away, Newsweek content isn’t more valuable than anything else”. Such an elaboration might be worthy of an entire book.

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Padraic Fallon, 1946-2012

Felix Salmon
Oct 16, 2012 01:21 UTC

Padraic Fallon died on Saturday night, age 66. The news came as a shock to me, not least because I was pretty sure that Fallon was 66 years old back in 1995, when I first met him. Euromoney, naturally, is the place to turn for a characteristically warm and spicy remembrance, but you can be sure that across London — and large swaths of Ireland, too — there are thousands more such remembrances being retold tonight, always with an alcoholic accompaniment.

It’s rare to find an English financial journalist who hasn’t intersected with Padraic at some point. (He’s one of those men known universally by their first names; one of the pleasures of working for Euromoney was listening to bankers mangle the pronunciation of “Padraic” while affecting a close friendship with the man.) Thousands of us went through the legendary Euromoney Publications graduate-trainee scheme, where the first thing we were told to do was to read his famous, and quite intimidating, style guide. And then, for those of us who worked on Euromoney magazine, there were the occasional editorial meetings chaired by the man himself in the company boardroom. The first words Padraic ever spoke to me were at one of those meetings. I remember those words to this day: “Are you wearing an earring??”

I realize now — and only now — that Padraic was still in his 40s at the time, but the cigar-chomping chairman was already a legend. Everybody who read his style guide knew that he was a fantastic writer, with a copy-editor’s eye for detail. But then he was so much more: a fantastic reporter, for one. And a fantastic editor. And an excellent publisher, who could sell and charm (or charm and sell) as well as anyone. And a highly-aggressive businessman, to boot, who always paid himself handsomely: last year alone he made about $8.5 million.

On top of that, Padraic was never a man shy about his opinions: one of the ways that he built Euromoney into a powerhouse in the first place was by being unapologetic about being a cheerleader for the then-nascent Euromarkets — basically, the market for offshore dollars, which weren’t taxed by the U.S. government. While at the same time relishing the scoop and the scandal as much as any journalist.

The opinionated founder-editor-publisher, of course, is the kind of person we see a lot of these days: think Mike Arrington, or Nick Denton, or Josh Marshall, or many others. In that sense it’s a very modern role, but it’s also as old as publishing itself, and Padraic was one of the masters. He also understood, long before the World Wide Web was even invented, the power of having multiple platforms: he was early to branch out into conferences, book publishing, and like. He also, I believe, was responsible for the Euromoney Awards: if you haven’t heard of Euromoney magazine, you’ve certainly seen the awards logo appear in the corner of hundreds of bank advertisements all over the world.

Padraic could make mistakes: his ideology and his ambition led him to the board of Allied Irish Bank, where he served from 1998 to 2007, overseeing the very years where the bank overstretched itself massively and then ultimately became insolvent. He also asked me to design a new publication he had decided to put out, called MTNWeek. But to err is human, and in many ways the most attractive thing about Padraic was just how human he was.

Every so often I’m asked how I ended up doing what I do; ultimately, the man responsible for my entire career, such as it is, was Padraic Fallon. He pretty much invented the idea that journalists could have huge success writing about bonds for a living, and he instilled in me a deep understanding of the bond market (and its corollary, a deep mistrust of the stock market) which served me very well indeed, first when I was writing about sovereign debt restructurings in the early 2000s, and then when I started blogging the financial crisis.

Padraic was very old-fashioned in many ways: the cigars, the dinners at the Savoy, the chauffeur-driven car. But he was also a great believer in modernity and change, and in particular the ability of small groups of badly-paid twenty-somethings to out-work, out-report, and generally beat much larger groups of much more well remunerated veteran reporters. Padraic gave thousands of us hugely valuable transferrable skills, as well as the idea the bond market is always the most important market, anywhere. He was surely right about that.


Vale Padraic. Memories of him striding down the hall revelling in the latest country to default in the early 80s. He couldn’t possibly have been in his mid thirties back then…

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Why Margaret Sullivan is right to be wrong

Felix Salmon
Oct 12, 2012 16:25 UTC

I was one of the “oxpeckers” quoted by Joe Coscarelli giving the new NYT public editor, Margaret Sullivan, a “rapturous reception” — not on the grounds that she was particularly spot-on in her judgments, but rather on the grounds that she has been infinitely better than her predecessors when it comes to engaging with the enormous range of voices with an interest in the NYT’s content, both on her blog and on Twitter.

Sullivan was unknown to the New York oxpecker crowd when she was appointed, and as she engages, her views are, naturally, coming into focus. She hails from Buffalo, which is much more conservative than New York City in both senses of the word. That was a good choice: I suspect that she’s more representative of the NYT’s broad national readership than just about any long-term Brooklynite would be.

For instance, on Tuesday Sullivan criticized the newspaper for running a quirky photo illustrating a quirky story; it was taken inside a men’s bathroom, and Sullivan declared that she “could have easily done without” it. More substantively, a substantial part of Sullivan’s harsh take on Andrew Goldman was based on the fact that “he used a strong obscenity” in a Twitter exchange. Indeed, she said that “given the level of obscenity” in his tweets, the NYT should think about setting up “a clear social media policy”.

Later, on Twitter, Sullivan clarified her thoughts a bit: she wasn’t necessarily into micro-managing what NYT staff and freelancers think, but does reckon that there should be “no blatant misogyny, no raging racism, that kind of thing”.

Personally, I think that by the time you need a social media policy to tell your journalists not to put raging racism on Twitter, it’s already far too late. But what’s interesting to me is the ease with which Sullivan lumped Goldman’s “strong obscenity” in with misogyny and racism, and the vehemence with which she reacted against it. While no New Yorker that I know would consider the tweet obscene at all. Here’s the single tweet she reacted so strongly against:


Sullivan’s column on Goldman was notable for the fact that she didn’t actually talk to him. That’s fine, in principle: you don’t need to talk to people before you criticize them, and Sullivan did tell Goldman that she would be “glad to consider” a followup if he had anything to add. But if there’s one small criticism I would make of Sullivan, it’s that she’s too shy when it comes to engaging with people she disagrees with.

The most obvious example, here, is her verdict on the term “illegal immigrant”. After asking for a discussion of the debate about the use of the term, Sullivan received — on nytimes.com, no less — a long and sophisticated answer from NYT reporter Lawrence Downes. He uses the phrase himself, but with many reservations, since it “defines an entire person,” he says, “not merely an unlawful act”.

The word turns 11 million people into a suspect class of quasi-criminals. It is a class-action adjective. It is the reason the country has not yet passed sweeping immigration reform, which in theory should be an easy thing to do.

Downes’s essay deserved a thoughtful response; in the end, it didn’t even get a link from Sullivan. Instead, after stating that “I’ve thought a great deal about this volatile topic”, she simply declared that the term “illegal immigrant” is “clear and accurate”, and that readers would not benefit were it banned from the paper. That’s a reasonable conclusion to come to, but a bit more detail on how she got there, or what she thought of what Downes wrote, would have enriched her piece significantly.

Every public editor shapes the job as he or she sees fit. Sullivan’s conception of the job is that she should be an engaged media pundit, not afraid of her own opinions — and that’s very welcome and refreshing. Her predecessors felt too constrained by the role: they worried about the weight their pronouncements would carry both inside and outside the newsroom, and were therefore too cautious when it came to doling them out willy-nilly. Sullivan doesn’t have that worry: she knows that the newsroom will feel free to ignore her. And that gives her latitude to be much more approachable and opinionated, both about the NYT and about other news organizations.

The result is that she’s turning into what you might call a media pundit with a bully pulpit. Ed Champion could never get a response from NYT Magazine editor Hugo Lindgren to his questions; Sullivan can. She has her own opinions — but she’s also responsible for representing the public inside the newsroom, and so she can extract answers from journalists and editors where very few others could. It’s a power and a privilege, and I’m glad that Sullivan is putting to full use her newfound ability to exercise it.

One of my slogans is that “if you’re never wrong you’re never interesting”, and Sullivan is a great example of that in action. I disagree with her on some things; I think she’s downright wrong on others. (A formal social-media policy encompassing even freelancers? No good could come of such a thing, quite aside from the fact that it would give the NYT’s legion of haters a bottomless well of potential ammunition.) The thing is, I’m happy that she’s wrong. Because it means that she realizes that the real value of her output is not in what she says, but rather in the way in which she can act as a venue for a fascinating conversation between the NYT and its many critics. Debates are always more interesting than pronouncements, and Sullivan’s hugely welcome innovation is to encourage the former, while effectively downplaying the importance of the latter.


Re: “quasi-criminals”

Nothing quasi- about it. If they are in the country legally the term is invalidated. If they are not in the country legally then it stands.

I’m surprised the topic is still discussed. Neither major political party has demonstrated intent to enforce existing law or write new law. All four combinations (RR,RD,DR,DD) have occupied congress and the white house with the operative phrase has been in play. The science appears to be settled.

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The caprice of publishers

Felix Salmon
Sep 27, 2012 12:36 UTC

TSG and Edward Champion have found a flurry of lawsuits brought by Penguin various authors who never delivered the books they promised. The lawsuits are asking for the authors’ advances back — but they’re also asking for interest, at pretty high and arbitrary rates.

Going down the list, Penguin is asking for $2,000 in interest from Rebecca Mead, on a $20,000 advance: that’s 10%. Marguerite Kelly is being asked for $5,000 in interest on her $25,000 advance, which is 20%. Lucy Danielle Siegle, Bob Morris, and Deborah Branscum are also being asked for 20% in interest, Elizabeth Wurtzel is at 25%, Jamal Bryant is at 24%, Carol Guber is at 26%, Herman Rosenblat is at 33%, and the Reverend Conrad Tillard is being asked for 35% on the unrepaid portion of his advance. Meanwhile, John Dizard is being asked for 45% in interest, while Ana Marie Cox is being asked for a whopping $50,000 in interest, which is 61.5% of her $81,250 advance.

There are two ways I can think of to justify the enormous range here. The first is just that the contracts were written differently. But if you look at the contracts in the lawsuits (for instance, in the filings for Cox, Wurtzel, Mead, Rosenblat, and Tillard), there’s no mention of interest or interest rates at all.

The other potential justification is that the interest has been accruing over time, and that the authors being asked for the highest interest rates are those who are most behind on their obligations. But that doesn’t hold up either. Wurtzel, for instance, signed her contract in February 2003, and Penguin asked for its $33,000 back in October 2008. If you annualize the interest she’s being asked for, it comes to 2.4% per year if you date the obligation back to 2003, or, alternatively, to 5.8% if you date it back to 2008.

Cox, by contrast, signed her contract much later, in January 2006, and Penguin asked for its money back a little earlier, in August 2007. (Penguin’s clearly a lot less patient when it comes to Cox than when it comes to Wurtzel.) The interest Cox is being asked for works out at 9.2% per year using the earlier date, or 12.1% per year using the later date.

In other words, there’s really no rhyme or reason whatsoever to the interest rates being demanded from these authors. And there’s a reason for going through this exercise: it reveals just how capricious and arbitrary Penguin is being, here. One book agent, Robert Gottlieb, immediately responded on the record, commenting on TSG that “if Penguin did this to one of Trident’s authors we could cut them out of all our submissions” — and you can be quite sure that Penguin did consider the agents of the authors in question before taking this course of action.

Publishers have a lot of power: they can reject a book, and ask for the author’s advance back, just if they say they don’t like the way that it’s written. That $325,000 advance they gave to Ana Marie Cox is certainly a lot of money, but most of it was never paid out, and if Cox’s star waned between the time that the deal was signed and the time that the book was due, Penguin could and did quite quickly move to make it very clear that they didn’t want the book after all — and that they did want their $81,250 back. Regardless of how much work and time and money Cox had invested into the book up to that point.

So while on the one hand it’s reasonable for publishers to ask for their money back if they never got anything in return, on the other hand the incredibly arbitrary nature of these suits — who gets one, who doesn’t, who gets asked for a little interest on top, who gets asked for lots — only serves to underscore the sheer unpredictability inherent in the publishing industry. You might think that you’ve hit the jackpot when you score a massive-sounding book advance. But in fact you’re just embarking on the toughest and most volatile part of the entire process.


Oh, and I want to add, I don’t have a lot of sympathy for authors who sign big-money contracts and don’t deliver.

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