DQM chats with Ken Auletta

Earlier today I sat down with Ken Auletta, author of the New Yorker's "Annals of Communications" column, before his appearance at Harvard's Shorenstein Center. We covered a fair amount of ground: topics discussed include his upcoming book on the future of media; whether newspaper traditionalists should be excited about Amazon's Kindle 2.0 and the prospect of micropayments; and (my personal favorite) what it is about newspaper types that makes us so resistant to change. An edited transcript follows:

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Q. Is there a working title for the book?

A. Not yet. There will be real soon, but I’m trying, frankly, just to concentrate on writing. I’m in a cave writing. I’ve got one more trip out to Google in April.

Q. Given the rapid pace of change in the media these days, how are you you managing to keep the book ahead of the news, or at least current?

A. The book is about change, so permeating the entire book will be how fast things change. That’s the underlying theme; that’s not a problem for me. But where to end a book that’s a moving picture--it’s not like you’re writing a biography, and someone dies, and you’ve got an end.

I’m writing now, and I’m covering into 2009 what’s going on--so when we get the latest figures from magazines or newspers or movies or DVD sales, I’ll have that. But if you look back over the last X number of years, you can see the direction stuff is going. The newspaper decline preceded the recession. Magazine decline didn’t, so you can make an argument that maybe the magazine decline is related to the recession, and we’ll bounce back.

Newspapers are more problematic. That decline was accelerating before the recession, and now it’s accelerating even more. And then people getting information on the web--they get it instantly, they get what they want, and it becomes a commodity. That’s much more of a problem for newspapers, but not as problematic as it is for music. Movies have piracy problems. Book publishers have cost margins, some piracy questions, and issues with distribution--Amazon’s dominance, Barnes & Noble’s. Is Amazon getting in the book-publishing business? Are they going to insist on a $10 charge for an electronic book rather than $30, and the publisher’s going to resist? Who has the leverage?

Q. Speaking of Amazon, have you seen the new Kindle 2 yet?

A. I’ve read about it, and I interviewed Jeff Bezos this summer about this. I saw the first one. Pretty cool. Obviously, someone’s going to come back with something that’s Web related.

Q. What’s your take on Kindle’s viability as a mode of newspaper delivery, now that we can get a tiny laptop for about 300 bucks? Is Kindle a delivery mechanism that could be part of the answer for newspers?

A. No. Listen: they sold 500,000, then ran out in the fall after Oprah. They say they’re not going to have that manufacturing problem again, but they’re not manufacturers, so they probably will. Is Kindle going to do for newspapers what the iPod has done for music? No. You can listen to music again and again. Newspaper content is perishable.

Q. Someone made that point on Romenesko today.

A. That was Gabe Sherman in Slate, and he’s right.

Q. What about the broader question of paying for news?

A. I have two views. One is, the people who run newspapers have to start with the assumption that they’ve got to change, and that an online newsper is different from a print newspaper. You gotta go in with an attitude, not of “I’m going to protect my turf,” but of “I’m going to change my turf to conform to this new medium that demands interactivity, which I’m not used to.” If they don’t do that--if they don’t say, “What are we doing wrong? How do we change?”--I think they’ll be in trouble.

But then the question is, are there things that the web culture has to get? The problem is, when you put stuff out on the web for free, and you can link to it, yes, it grants you more exposure for your stories. Many more people will see it, and maybe you can sell some advertising off it. But then there’s a basic question: if many more people are seeing it--as Jeff Jarvis for instance argues in his new book, What Would Google Do--and you can monetize it by selling ads off it, are the ads you’re going to sell going to make a profound difference?

Look at the New York Times online. The Times gets what percentage of its revenue digitally? 12 percent. It’s not enough. Now, you could say that if you got out of the distribution and paper and printing business, you’d save 65 percent of your cost. But digital doesn’t make that up--andyou’re relying totally on advertising;  you have no circulation, so the wall between editorial and business comes down a little bit.

So then the question becomes, if you think that certain journalistic endeavors are really valuable--the Times, the Journal, the Washington Post, the Boston Globe, whatever--the Times has five or six reporters and sixty stringers in Baghdad, spending millions of dollars. No blog is going to spend that; no other newspaper spends that.

But if news is a commodity, and I go on the web and want to find out what’s happening in Baghdad, and I’ve got a choice of three four things--including the AP, which has a deal with Google, so that’s monetized--then the question is, at some point, does the value of news from the Times or Post or any other great journalistic effort falter? And therefore do readers say, I just want my little stack of news; give me a little synopsis;  I don’t need 2000 words and I don’t need the New York Times. Then you’re dead.

The question for newspapers is, is there some way--be it micropayments, subscriptions, or something else--to make money from your content? I mean, I write a book, I’m not going to give it out. That’s how I live! Jeff Jarvis, who believes in free, got paid in advance for his book. Content people should be paid. They’re not going to work for nothing. A musician’s not going to work for nothing.

And if you say, “We’ll do it all through advertising”--well, what if advertising doesn’t cover the cost? Does Facebook make money? Does YouTube make money? Neither of them makes money. They have a great audience, great traffic, but don’t make money. You can build it, and they may not come; in this case, the money may not come. Now, maybe they will: they’re unbelievable sites, and they provide a great service to people. But they’re not making money. And they’re businesses.

Q. A lot of us who get paid to work in the media seem to assume that some sort of viable financial solution must be out there, simply because we think the press is important. But that doesn’t hold up logically.

A. It doesn’t. That’s part of the first point I was trying to make: it’s a different medium, and people who run old-media institutions have to ask what they have to do to change. That doesn’t mean you lower your journalistic standards. But it does mean maybe you’re going to allow more citizen participation, more blogging from people who you don’t control. Even the Times is doing this: they have a good online product, they’re trying to get it, but it may not work.

I remember interviewing Andy Grove, who was the head of Intel at the time, in 1995. The internet starts in 1991, so it’s starting to gather steam, but it still wasn’t the internet as we know it today. And I said to him, “Mr. Grove, Intel is spending hundreds of millions of dollars on these start-ups. These investments are internet-related or digitally related; they’re not related to [computer] chips, nececessarily. Why are you doing that?” And he said,  “Because you have to plant your flag on the moon and be there first. Who knows what’s going to happen? But as the future’s being shaped, I gotta be part of that shaping.” And I think that’s the right thing to do.

If you go back ten years ago, newspaper proprietors were talking about the web and how they had to do more things there. Tribune Co. invested in the web and made a lot of money; they exited AOL at the right time, by the way. Knight Ridder invested in digital classifieds. Arthur Sulzberger Jr. has been saying for ten years, at least, “I’m agnostic about whether my paper’s online or in print. I’d save a lot of money if it weren’t printed.”
    
It’s almost an academic exercise for people to say this. The question is, are you walking the walk? Are you really doing it? And doing it means changing. The medium is two-way, and it demands you change. And we are not two-way. We have letters to the editor; we have ombudsmen; but essentially we’re a defensive group of people who are used to having the last word.

And I believe in that! I believe in journalism as a calling, and that you can’t let the story you write be dictated by survey research that says you should be writing more about Britney Spears. I think sometimes you have to tell your readers, “Eat your spinach; this is important for you as a citizen.”  If I’m going to be called a professional, I have to act like one--to tell you this belongs on page one, and this belongs on page 20, and this isn’t a fair lede, so I’m going to change it. tell you bel this bel p 1 this bel on p 20 this is not a fair lede.

On the other hand, as we learned from The Wisdom of Crowds, you can learn a lot from people and you gotta be open to listening. And you have to make them feel a part of it in some way. Maybe they give you tips: a tsunami hits, Katrina hits, we get all these pictures on television--

Q. Terrorist attacks in Mumbai--

A. Invaluable stuff. Look what YouTube did for the presidential campaign. with the campaign. Look what happened with Senator Allen  [of Macaca fame]. People contribute real important things, so we gotta be open--but it requires a mindset change.

Q. Are there any old-media institutions you think have been exemplary in terms of being open to change?

A. Exemplary in terms of embracing change that’s worked?

Q. I’m thinking of places that don’t just talk about it, but actually do it.

A. Martin Nisenholtz at the New York Times, who runs the digital stuff, really is a web guy. He gets it.  But one of the things I believe he’s encountered over the years--he doesn’t say this to me, because he’s too discrete to do that, but I know he has--is resistance from the newsroom.

The initial resistance we had in the news business was, “We’re going to hold the news until the morning; we’re not going to share it with you.” That’s changed. Look at Sports Illustrated: they come out on Tuesdays, but they put the news about A-Rod’s steroid use out on Saturday.  And look at the value to SI of putting it out! SI’s actually done a pretty good job on the web, and they make real revenues.

But I think the resistance the traditional media has is very hard to overcome. Now the resistance is opening up to market research. And we’re unused to criticism, unlike the people we cover--in politics, say--who have thick hides.

Q. In your 16 years writing “Annals of Communications,” is there anything you got right that you’re particularly proud of? And conversely, were there any big developments that you just didn’t see coming?

A. I reported in 1992 on Barry Diller’s quest for the future. Diller had left 20th Century Fox and the Fox Network, which he ran for Rupert Murdoch, and wanted to figure out what the future was. He went out and bought a Powerbook--online was just coming into being--and he used the Powerbook to communicate. He visited Microsoft, Apple, software companies, hardware companies, cable companies, broadcast companies, digital companies. He went on a search for what the future was going, and I followed that, and recreated it after he went to QVC, which was interactive. That’s probably the story that got most reaction at the time, because people knew there was ferment, that something was going on.

The mistakes--well, you rarely see the changes coming. Who saw Google coming? And who saw that search would not be just search, but empower you to bump into lots of media industries as got bigger? Links to newspapers and magazine. YouTube challenging television and movies; Google challenging the advertising industry by saying, “We can give you better data, so why don’t you just come to us?” Putting books online--a lawsuit was occasioned by that, and they finally settled, but that’s a big deal.

I interviewed Bill Gates in 1998 for a book I was doing on Microsoft; I covered the [antitrust] trial for the New Yorker and then wrote a book about it. And I said: “So what do you worry about?” I thought he’d say he worried about Netscape or Apple or Sun Microsystems, but he didn’t say any of that. He said, “I worry about some guy in a garage I never heard of.” That’s Google.

When AOL and Time Warner merged, there was a feeling that, “Oh, wow, they’re vertically and horizontally integrated; they’ll dominate the world.” And people forgot in that case something that Bank of America forgot in the Merril Lynch case, which is that cultures matter.  If there are different cultures, or resentments, they’ll never get together. There’ll always be resistance, there’ll always be silos: you can’t come in my silo, and we’re not gonna cooperate with you, you son of a bitch.

This is one of the things I always learn as a reporter who has the luxury of time. People matter. It’s not just slide-rule logic; it’s not just “Gee, that looks great on paper.” What are the reasons people might not cooperate with each other? What about the pride factor, the greed factor, the stupidity factor? It’s always shocking to me that smart people do really dumb things.