In summer 2005, the children of Washington, D.C., heard a sound familiar to generations before them, the ringing call of the ice cream truck. But this wasn’t any ordinary ice cream truck. This truck was handing out information about a website along with the cones and popsicles. The unconventional promotional vehicle was the idea of Tim Ruder, the vice president of marketing for washingtonpost.com. It is one of the marketing tactics he is deploying to increase local awareness and usage of the online news site. The ice cream truck together with other marketing strategies has enabled the Washington Post’s website to grow at double-digit rates and to make money from free content on the Web.
Turning a profit on the Internet is not the only challenge the washingtonpost.com has surmounted. The site’s ability to maintain quality journalism while confronting new business pressures flies in the face of the conventional wisdom. If you listen to talk show pundits, read editorials and study surveys, you might believe those business pressures are actually so insidious that they are undermining the very soul of American journalism. The perception that American journalism is in trouble is underscored by scandals such as the CBS’s reliance on fake documents to challenge President Bush’s National Guard service — or the charges of abuse of the Koran at the Guantanamo Bay prison camp that were retracted by Newsweek only after they fueled deadly riots in Muslim countries.
Journalism, so the cry goes, is caught in a vicious downward spiral: As profits are chased, standards drop. And as standards drop, readers and viewers lose trust and turn away from mainstream journalism. Audience loss makes it harder to earn money from advertising, leading to further chasing of ratings and circulation goals, and further lowering of standards to appeal to the lowest common denominator.1
Case in point: The Discovery Channel — whose initial credo was “Explore Your World!” — shifted its programming from traditional documentaries to reality programming and dramatic re-creations in an attempt to sustain audience growth, only to now show signs of returning to its origins with a management reshuffle and the hiring of ex-”Nightline” anchor Ted Koppel.
But as the washingtonpost.com, some print publications and a number of television outlets are proving, this stereotype of the effect and cause relationship between declining journalism standards and economics is far from a universal truth. The success of those who are thriving lies in not complaining about what is happening but rather in embracing it, addressing the changes and exploiting the new opportunities they open.
How the dinosaurs died
Most of the changes journalists bemoan — unprecedented media consolidation under corporate ownership, increased competition, new trends in audience usage of news, fragmentation — reflect a transformation of the media environment, a change to which most journalists don’t know how to respond. It is a fundamental change in the relationship between journalist and audience. The failure to adapt to this new relationship has a simple consequence: Many journalists will soon find themselves in another line of work.
Simply put, for the last century, journalists have had it too good. Journalism was an oligopoly where the choice of news providers was limited so audiences had a choice to either get their news from one of the established news outlets or not get news at all. It was a relationship where virtually all the power belonged to the journalists, allowing them to shape mainstream journalism with only passing regard to audience preferences.
As recently as 1980, there were only three television networks from which to get news in the United States: ABC, CBS and NBC. Newspaper readers had more choices, but the variety was deceiving. Even when cities like Chicago had as many as a dozen newspapers battling for readers, the papers were offering more or less the same kind of stories. Competition may have been fierce but it was defined and stable.
This oligopolistic market allowed the foot soldiers of journalism to ignore the business side of their profession. While the senior editorial management has always had its eye on the bottom line, an aura was created, especially after World War II, in which American journalism was held up by journalists as having a higher social responsibility, involving the civic duties of preserving and defending democracy. It was a role seen as embodied in the First Amendment of the Constitution and one too important to be left to business.2
Lest business considerations contaminate the editorial product, journalists demanded, built, and prized a “Chinese wall” between the editorial and business sides of the newsroom. Egregious breaches of that wall, such as when the Los Angeles Times shared advertising revenue from a special section devoted to the opening of a new civic center with the civic center’s management, are still held out as definitive statements of the evils of business.3 Somewhere in the process, journalistic conflict of interest grew to include any intrusion of commercial considerations into the editorial process. But it was an attitude that journalists could indulge in only as long as their business model was protected.
The new media world
For television journalism, that protection ended with the flick of the switch that turned on CNN’s lights in 1980. Suddenly the three networks were not alone. Today there is a veritable news traffic jam on TV screens across the country. The result has been that the slices of the audience pie for each channel have gotten smaller.4 No one has been spared, not even the fabled ABC News “Nightline” program, widely regarded as the highest quality broadcast journalism on the air. It has lost almost half its audience, from 6.3 million down to 3.8 million, over the last decade.
The new competition is not just within traditional media — it is from new sources of news, such as the Internet, portable e-mail devices like Blackberries, cell phones and iPods. In printed media, desktop publishing has shattered the capital requirements for publishing. Barnes & Noble, the nation’s largest news agent, today carries 3,500 magazine titles.
This fragmentation has reversed the current on the power relationship between the journalist and the audience: Now the audience is in control. But an information overload has often meant audiences are simply tuning out. As “Nightline” has discovered, good and important journalism is no longer enough. The responsibility to inform now has to be married to giving the audience a reason to tune in.
Looking for answers
The natural response for journalists, since this is what they are trained to do, is to seek solutions to declining audiences through editorial adjustments. Those are limited to changing content or design — alterations that fail to conceive of the news product as a whole with a particular place in the market. Making changes based on what is thought to attract audiences can easily morph into chasing ratings and sacrificing journalistic standards, which is the heart of most journalists’ complaints about the state of their profession.
But washingtonpost.com’s success demonstrates that there is an alternative approach, one in which good journalism and good business are not incompatible. It is a strategy based not on chasing an audience but rather by sharply focusing on the intrinsic strengths of the news product and defining in what part of the market it belongs. It is a strategy that combines marketing and editorial fundamentals. Two other news organizations that have followed similar but unique paths to success. The Washington Monthly, a political magazine, has reversed declining circulations to restore its market position and found financial health for the first time in its 37-year history. Similarly, the Discovery Times Channel, a cable television joint venture between The New York Times and Discovery Communications Inc., has increased advertising sales revenue sixfold and more than doubled its audience in less than three years.
While washingtonpost.com, The Washington Monthly and the Discovery Times Channel are all news organizations (and thus in competition with each other) each is in a different medium and at a different stage of development, so the strategy for each has its own unique characteristics. But, examining the strategies of all three, it becomes clear that there are several common themes that have contributed to their success. Those are:
- Understanding the product — Each of the news organizations is very clear about what it does and the value proposition of its product. Understanding the origin of each product — whether it’s a new brand extension or a reinvigorated old product — is crucial to defining that value. This origin not only shapes the product but also defines the business objectives beyond profit.
- Knowing what the target audience is — Since each product is clearly defined, the news organization must understand which audience its value proposition appeals to. That knowledge allows targeted marketing and shapes promotion strategies for the product’s market space.
- Resourcefulness — All three organizations have only a limited ability to take advantage of the distribution and marketing channels that news products traditionally use, and all three have restricted marketing budgets. As a result, the three organizations have had to devise unconventional strategies that leverage their competitive advantages as cheaply as possible, using such phenomena as viral marketing and earned media.
- Competition — In the hyper-competitive journalism business today, no news organization can succeed without understanding and responding to the competition. The three outlets examined here have unconventional views of, and responses to, their competition. For example, The Washington Monthly has collaborated with the very publications with which it would seem to be in direct competition. Such strategies reflect the three news organizations’ unique understanding of their market environment. Moreover, competition comes not just from other existing outlets; news organizations must also anticipate the challenge of future technologies and not yet existent rivals, and find new ways to increase their audience and expand the relevance of their products.
The Discovery Times Channel
All the news that’s fit to watch
“The idea was for The New York Times to get its brand out there. The Times is no longer about print. It is about every medium.” With that description, Vivian Schiller explains why she is sitting in her corner office in the space ship-like Discovery Communication headquarters in Silver Spring, Md.
Her title is Senior Vice President and General Manager of the Discovery Times Channel, a digital television cable and satellite channel launched in 2003 as a joint venture between two of the best known names in American media, The New York Times and Discovery Communications Inc. Her job is to create a current affairs documentary television channel and make it profitable in a saturated TV market where 500 channels offer every kind of programming from pay-per-view to broadcast networks.
Making the challenge more interesting, the idea is to represent the Times brand, meaning Schiller and her team have had to achieve their mandate while marrying the journalistic standards of the newspaper with the entertainment imperatives of Discovery. It’s a balancing act that Schiller boils down to “finding what is entertaining in a journalistic context.”
Filling the vacuum
The first surprise about the challenge facing the Discovery Times team was that at the outset there was remarkably little direct competition. For all the long-form programming available on other channels, including other Discovery Channels, few, except public television, offered much long-form current affairs programming. Schiller believed that she could fill that vacuum and attract viewers who would “migrate” to her channel by clicking through the other offerings until they found “something worth watching,” she says. She believes that the news networks, her primary competition, would indirectly funnel viewers to her programming as they looked for something more informative and in-depth than the superficial live shots and talking heads that predominate on cable news.
Schiller says her formula is in fact very simple: Find good stories with good characters and tension in the story lines that can “break through the clutter” of other programming that clogs cable television — and viewers will tune in.
The Discovery Times Channel’s positioning statement — a phrase that is imbued with the values, objectives and principles of a company and that seeks to define its place in the market — sums up the organization’s attitude: “We are the why behind what’s happening.” Vice President of Production and Development Bill Smee expands the company’s vision to include “documentaries between where the History Channel leaves off and where the networks pick up.” The programming covers the full range of the newspaper, from hard news to culture and health. Initially, though, the commissioned programming reflected only the kind of hard news and analysis that would be found in the “A-section of The Times,” according to Smee.
Getting them to the tent, let alone inside
Legendary CBS “60 Minutes” executive producer Don Hewitt once said, “If you don’t get them into the tent, they are not going to see the show,” referring to the need to make the beginning of shows interesting enough to hold viewer attention. For the Discovery Times Channel, the problem is a bit more daunting. Vivian Schiller has to let people know she has a tent before she can entice them in. And she is not satisfied leaving it to “migration or frustration” alone to bring viewers her way.
But she is handicapped in reaching viewers because the channel, as a cable television operation, must overcome several barriers to its audience. Unlike broadcast networks that are available to any home with a television and antenna, cable networks such as the Discovery Times Channel are not only dependent on the cable operators and satellite providers carrying them, but also on individual households subscribing to that cable or direct satellite systems, and then subscribing to the extra premium service that is required to get channel such as the Discovery Times Channel.
Moreover, Schiller doesn’t even get to sell her channel on its merits alone. The Discovery Times Channel is sold as part of a package of several networks, known within Discovery as “emerging networks,” by a sales force whose loyalty is to the greater Discovery Communications corporation rather than Schiller’s channel alone. However, that bundling in practice turns out to be more of a “virtue than a detriment,” according to Schiller. She believes that bundling other Discovery Communication Channels provides important leverage with providers and without it she would have much less distribution.
Schiller’s response to this handicap is that if she can’t get directly to her audience, she does the next best thing: Get to those who get to her audience.
“My primary concern is reaching those I can influence: the media writers, advertisers and cable owners, who in turn can get the word out to viewers. The media writers are generally high-minded journalists looking for something serious to write about, and we provide that and a good story,” Schiller says. “Advertisers want something different and serious to put their money behind and cable operators are essentially interested in one thing, driving digital upgrades. They want unique, differentiated programming that is also high quality.”
Those stakeholders are targeted through a two-track marketing strategy: paid media (such as advertising campaigns) and earned media (such as reviews).
Nellie Ryan manages paid media or purchased advertisements for the channel. Her initial strategy was to promote four or five different shows per season in The Times and key publications, supplemented by joint-venture-mandated cross-promotions on other Discovery networks. Those ads are the traditional component of the Discovery Times marketing, but they’re not working as well as they should.
As the Discovery Times team has come to understand its audience and viewers’ habits better, they have realized the marketing initial strategy did not accurately reflect how people watch television. The strategy of promoting a number of programs was based on an understanding that viewers needed to see an advertisement three times before it made an impression. That number of required repetitions is called the frequency rate. New research has shown the frequency rate today has increased to between seven and 12. In other words, if viewers don’t see the same promotional material repeatedly, they don’t remember it. Reaching that rate is expensive but manageable with a big marketing budget. But Schiller has only about half a million dollars to spend, less than the main Discovery Channel spends on one major program. As a result, the Discovery Times Channel will from now on splurge on major campaigns for one or two shows a season rather spreading its budget over half a dozen shows, she says.
The knowledge that the promotional strategy was not creating as much brand recognition as hoped was reinforced by focus group testing of New York Times readers that showed that, for all the advertisements the Channel places in the newspaper, most still have no idea what the Discovery Times Channel is. The current strategy of smaller advertisements, a quarter page or less, and mostly in the front section, is being shifted to a fewer larger, even full-page, advertisements for a few programs in more strategically placed locations. For example, a show about arena football will have an advertisement in the sports section.
Complementing the paid strategy is earned media, the free publicity that comes from articles written about the Channel, reviews of shows or other references. This strategy has so far been more successful than expected. “We have had more press than a network of our size probably deserves,” says VP Smee. This is likely to be at least partly attributed to the fact that, as Schiller suggested, the channel provides television critics something more substantive to write about than the usual reality shows. But the coverage is also due to the efforts of Reenie Kuhlman, the marketing manager responsible for implementing this strategy.
Kuhlman has pursued a strategy of aiming beyond the “usual trade publications,” targeting what she calls “vertical media.” She cites as an example the work she has been doing to promote an upcoming episode about gay rodeos by targeting cowboy magazines and gay publications. While her goal is an article about the Channel show itself, she considers it a success if the magazine carries a story about the same topic which coincides with, or mentions, the Channel’s program.
What’s in a name, anyway?
If the lack of direct competition was the first surprise, the second surprise awaiting Schiller and her team was the nature of the audience that the channel attracted.
One of the biggest changes that Publisher Arthur Sulzberger Jr. has brought to the paper since he took over from his father has been the focus on expanding The Times’ business beyond its core identity as a New York metropolitan newspaper, reaching new markets and new audiences. The Times has long had interests in other publications, such as the International Herald Tribune and local television stations, but Sulzberger made expansion a priority. Under his leadership The Times has more fully developed its national edition, purchased more local television stations and newspapers such as the Boston Globe — and has expanded onto the Internet. But the Discovery Times Channel was the first extension of the Times name to something other than the newspaper or the online version of the newspaper.
Since the new channel carried the Times moniker, had the same quality of journalism, and covered similar topics, it seemed logical to begin with assumption that it would appeal to the same audience. But Schiller and her staff got a quick lesson in the new laws of fragmentation.
Vice President of Production and Development Bill Smee recalls, “The initial gambit was to build off The New York Times, to leverage its readership and the full page advertisements that we were given at a discount. It turned out that, while the ads were indeed cheaper and looked awesome, they did not drive viewers to the network and actually had questionable value. What we started to see was that Times loyal readers were not necessarily Discovery Times core viewers.”
Viewer research conducted by both Discovery and outside organizations showed that those highly-educated, urban readers were not tuning in. Instead, the Channel’s viewers were mostly males who live in the suburbs of metropolitan areas in the South and West and were moderately educated (started but did not finish college) with a median age of 47. The research also showed that those viewers could be divided into to categories: news junkies who want as much information as they can get, and pragmatists, people who want information but are not news addicts.
This picture of who was actually watching the channel presented Schiller and her team with a good and bad scenario. The bad was that the initial plan for developing the Channel had to be adjusted or at least reviewed in light of who the real audience was turning out to be. The good was that the Channel was bringing the Times brand to a whole new market, which had always been an important goal behind Sulzberger’s expansion plan.
Good news amid gloom
What is more, that new audience is growing, allowing the Discovery Times Channel to become the little network that could while its big sister networks within the Discovery family are suffering crises of both audience and identity. Schiller and her team are rightfully proud of their success. Since the channel’s launch in March 2003, the number of households that receive it has grown from 21 million to 36 million today, reflecting audience interest and the channel’s appeal to cable operators.
Perhaps more importantly, advertising sales revenue has increased sixfold proving that the fragmentation of the media does not necessarily mean that pie has to get smaller for everyone.
But the challenge for Schiller will only get tougher. When the network began, it essentially had its market space to itself. The History Channel shows were not generally about contemporary stories, the network news long-form programs were too few, and public television was viewed, if incorrectly, as too stodgy. But three years after it went on the air, the channel’s market vacuum is rapidly being dissected.
Today the arrival of the Military Channel, former Vice President Al Gore’s Current.tv network and other niche longer-form channels make Discovery Times now look less of a specialized upstart and more of general interest documentary channel.
The Channel’s response to this changing market environment has been not to chase the competition and market fragmentation, but to stick to its initial mandate — a general topic, current affairs documentary channel. Rather than specialization, Schiller and her team are heading in the other direction, expanding the range of their stories beyond just “doom and gloom” programming, as VP Bill Smee describes it. Smee believes that to grow its audience the Channel has to expand beyond its current A-section material of hard news and analysis to explore topics like science and culture that might appear in other sections of the newspaper. He is also experimenting with new formats with two series and a magazine program that made their debut last fall. This new strategy reflects the understanding that the audience has been established and now it is ready to evolve.
These steps are all part of Schiller’s plan for continued growth outlined in a five-year plan. But she views that plan more as a passive goal than an active benchmark. “Five-year plans are of questionable use even if the environment is stable. In television today, it is anything but,” she says.
But one part of that plan is set. It is the formula that has driven growth so far and which she says will remain at the core of the Discovery Times Channel: “To offer viewers the kind of quality and relevant programming they can’t find elsewhere; to represent the best of what both the New York Times and Discovery represent to their audiences. It’s not about extending the Times brand, it’s about extending the journalism to other forms of media.”
The Washington Monthly
Hurts so good
There’s nothing like trying to revive a moribund institution, let alone betting your own money on it. “I haven’t had a real vacation in a year, I have never worked harder in my life and I have never had as much fun as I am having now,” says Paul Glastris, Editor-in-Chief and co-owner of The Washington Monthly, musing about what he’s got himself into.
If the Discovery Times Channel’s Vivian Schiller is trying to create something new to extend an established brand, Paul Glastris’ canvas is a 37-year-old niche publication in a less-than-commercial niche of the magazine industry. The core of his challenge lies not in boosting the magazine’s falling circulation and rebuilding its finances, but rather in restoring its reputation as an aggressive, independent political journal doing the kind of journalism other publications aren’t been. But first he had to make sure his magazine didn’t fold.
Glastris remembers his first day on the job in 2001: “All we had was two working computers, one Internet line and we were not making a dime. It was an institution teetering on the brink, but we had incredible brand credibility.”
All soul, no cash
The Washington Monthly was founded in 1969 by Charles Peters, the former head of evaluations for the Peace Corps under President Kennedy. In that position Peters had spent much of his time figuring out why some programs worked and others didn’t — and he decided the entire government needed the same type of critical analysis. So after leaving government, he tapped some friends and started the Monthly to be an independent watchdog.
For the first three decades of its existence, the magazine had three defining characteristics. The first was that it was driven by its mission and as such was the embodiment of its founding editor, Charlie Peters. The mission quickly earned the magazine a reputation as a quality political journal.
The second characteristic was that it became known as the farm team for generation after generation of the nation’s leading political journalists, who would spend a brutal two years early in their careers editing the magazine for Peters in virtual slave conditions. Journalists like Nicholas Lemann, now dean of the Columbia School of Journalism; Michael Kinsley, the founder of Slate; and James Fallows, currently The Atlantic Monthly’s national correspondent, all went through Peters’ mill, honing their craft. It became the journalistic equivalent of clerking for a Supreme Court justice. Being a Monthly alumnus made you a member of an informal elite club. That club has become an important differentiator for the Monthly in that the alumni have remained loyal to their alma mater, creating an A-list of contributing editors and writers who guarantee the magazine’s journalistic credentials.
The third characteristic was that it was an awful business. Like many small businessmen, Peters ran the Monthly in his head, supported by a mysterious web of backers such as Warren Buffett and Jay Rockefeller. Making money was never the main point, and in all but just a few years under his control, the magazine simply didn’t.5
By the late 1990s, the formula that had differentiated The Washington Monthly started to unwind. As long as it was doing pioneering political journalism, its reputation could carry it. But as the Clinton era came to a close, the magazine was widely viewed as having lost its distinctive edge as an independent liberal voice. “It’s hard to keep sharp after 30 years of editing,” says Glastris in defense of Peters.
Peters decided it was time to retire, but he would only do so if he could guarantee the magazine’s continued existence. After rejecting several suitors, Peters finally accepted an offer from Glastris — a former US News & World Report journalist, President Clinton speech writer, and Monthly alumni club member — and Glastris’ partner and business backer, Markos Kounalakis, a former journalist who had turned Silicon Valley businessman. Kounalakis became publisher.
Keeping the lights on
Glastris and Kounalakis realized almost immediately that they had to change the fundamental business strategy of the magazine if it were to survive. But they faced a problem bigger than the Monthly’s financial disarray. It was clear to both Glastris and Kounalakis that any small independent magazine was unsustainable economically in light of the downward pressure on advertising pricing and an ever more fragmented marketplace. That was particularly true for a political magazine such as theirs with a target market limited by its niche profile.
If the magazine couldn’t be profitable as a for-profit company, the obvious alternative was to turn it into a not-for-profit 501 (c) 3 corporation. Ironically, the idea to make that fundamental business change did not come from either of the new owners. Rather it came from founding editor Peters who, after running the magazine for over three decades, decided to make that change a condition of his giving up control of the magazine. Though Glastris had initially planned to keep the magazine as a for-profit venture, he began to see the benefit of this new strategy.
Turning not-for-profit meant a number of new restrictions for the Monthly — including prohibiting lobbying and limiting advertising content to 10 percent to retain not-for-profit mail discount pricing. But the magazine was never intended as a lobbying organization. It wanted to work on a bigger canvas. Moreover, there wasn’t enough advertising to breach that 10 percent limit. On the upside, not-for-profit status would open new possible revenue streams from foundations and other donors, with donations being tax-deductible.
Not only is the business model more viable, but not-for-profit status is actually far more suited to the magazine’s agenda of being mission- rather than profit-drive. The Glastris-Kounalakis Monthly underscored that prime imperative when the they crafted an updated positioning statement: “The Washington Monthly is mission-driven. Our aim is to be the most interesting and influential center left political magazine in society.” That goal of seeking influence drives every aspect of the magazine’s operations but is now married to the parallel mission of making the magazine viable enterprise.
Deciphering, undoing, rebuilding
Making the change to a viable not-for-profit enterprise meant deciphering and undoing how Peters had run the company. The first priority was to get control of a magazine that was actually owned by a web of 43 separate owners organized in a half-dozen sub-companies. That was done one phone call at a time. Glastris says, “I spent months making calls personally to the heirs of uncles who had owned shares in one of Peters’ sub-companies. I would have to explain they had already lost their money — now we were trying to do something different.” By the end of 2001, ownership of The Washington Monthly was unified under Washington Monthly Corporation, of which Kounalakis is chairman.
The second step was to get the magazine’s operations under control. This turned out to be more of a task than either new owner had expected. The first question they faced was: What operations? Peters had kept virtually no records to show how he managed the company. There weren’t even accounting records to track cash flow. One of the more surprising discoveries, once they did start to decipher what had been happening, was that because of poor record keeping, many distributors of the magazine had not been paying anything back for two years. The Monthly had effectively been giving away its publication for free. It took months of detective work by new business manager Claire Iseli and Kukula Glastris (Paul Glastris’ wife) to piece together fragmentary records so that distributors could be billed.
With a new management team in place and operations under control, Glastris and Kounalakis turned to the future, making projections and building plans. Their clear focus on the mission-driven nature of the product has been accompanied by an equally clear business formula. They want unlimited influence with limited circulation.
More specifically, The Washington Monthly has set a circulation ceiling of 40,000 subscribers. Once a publication reaches that number of subscribers, advertisers become much more willing to buy ad space, according to Glastris. But that becomes problematic for the Monthly because, as a non-profit, IRS code says that a publication can’t carry more than 10 percent advertising, which is much less than commercial publications generally carry.
Glastris believes that at 40,000 subscribers, he can attract the right amount of advertisers and still maintain editorial direction. Exceeding that number would, Kounalakis says, force the magazine “to change its voice and focus to attract a much broader audience by focusing on political personalities and taking on more of the tricks and tone of GEORGE [the now-defunct political magazine], and we aren’t prepared to do that.”
Making something with nothing
The marketing challenge for the Monthly is to reach its limited circulation goal while seeking unlimited growth in its influence on a not-for-profit (read small) marketing budget.
Virtually all the money goes into a direct marketing campaign (last year $250,000) built on subscriber lists from similar political magazines, which experience has shown produce the highest potential for success. Both Glastris and Kounalakis are pleased with the response rate for the direct mail campaign — ranging between 2.5 and 4.5 percent — which helped increase the number of subscribers from 15,000 in 2001 to 25,000 today, with an additional 5,000 copies purchased at newsstands.
Other than direct mail, The Washington Monthly does virtually no traditional promotion. The magazine’s own website has a link for new subscriptions. There is no paid external advertising.
The Washington Monthly’s real success is how it has waged an unorthodox marketing campaign, leveraging the external political environment. As a liberal political journal, Glastris openly credits the Republican administration with driving readership growth. “George Bush is the best thing that happened to our magazine,” says Glastris. “What is bad for the country is good for us. Just as Bill Clinton was a God-send to the right-wing press, George Bush is good for the business of liberal political journalism.”
That in turn leads to the most efficient promotion strategy from Kounalakis’s perspective: viral marketing. “Some of our best marketing is done by readers who see a piece that some other magazine or blog cited, and pass it on.” This free marketing is a product of the new media age: Now readers who want to pass on articles can simply e-mail links. This viral marketing serves as both a promotional strategy and satisfies the magazine’s mission of spreading its influence.
Of course, none of that viral marketing would be happening if there wasn’t something worth talking about. The strength of the Monthly had always been its aggressively independent, liberal journalism. Glastris has made it his personal mission to restore that journalistic character but update the context to reflect the new political era.
At the core of that mission is Glastris’ editorial philosophy that mainstream journalism today is strangled by the desire to seem so unbiased that no sides are ever taken. His aim is to produce “journalism that is so good and different that it should show the way forward,” he says. “We do that by reporting those political stories others are talking about but aren’t writing about. For example, in the January 2005 edition we had an article about Democratic campaign strategists who keep losing but have a virtual monopoly on Democratic campaigns. We know that article was on every congressional desk the next morning.” Glastris is certain that anything less unique would not interest his core audience of elected officials, political operatives and journalists.
If that brand of aggressive journalism is a return to the magazine’s roots, Glastris wanted to make equally sure the magazine was relevant in today’s political environment. For most of the magazine’s history, Democrats held much of the power in Washington — so the Monthly focused on agencies and programs, looking at the rights and wrongs of initiatives. But as the Republicans swept aside the Democrats, Glastris says the political focus in Washington shifted from agencies and programs to ideologies and powerful personalities, especially with the rise in influence of lobbyists that line Washington’s K Street. It is that story of parties and ideology rather than big government that Glastris believes needs to be told today.
No squabbling in the school yard
While the Monthly’s formula has been updated, so has the view of its competition. Even with all the other political publications vying for readers and the limited foundation funds available (several other political magazines have also taken the not-for-profit route), neither of the Monthly’s owners thinks they have any competition. Rather, they argue the Monthly occupies a unique space in political journalism, while other left-wing political magazines, such as the American Prospect and The New Republic, are viewed as occupying different spaces on the political spectrum.
Rather than engaging in cut-throat competition, Glastris and Kounalakis are instead looking for ways to collaborate with these magazines that might normally be considered direct competitors. They already share subscriber lists and are actively exploring ways to cooperate in distribution or other areas of operations. It is the kind of collaboration that Kounalakis says small independent publications need to do if they are going to “simply survive.” Their enemy is not each other, but rather the brutal new economics of their industry.
An online future
Kounalakis, however, has no intention of merely surviving. His efforts today are focused on how to extend the Monthly’s influence. He has concluded that while the magazine will always be the flagship of the Washington Monthly brand, the future isn’t on paper. Rather, in an era when the audience looks to get its information ever more quickly — and the mail, the main form of distribution, seems to move ever more slowly — it’s time to redirect the Monthly’s marketing strategy online.
The strategy here is yet another case of shunning the obvious. Glastris and Kounalakis saw little point in just putting the magazine on the Internet since they believed this would likely do little to extend the influence beyond the current readership. Rather they looked at the Internet and saw that “a lot of magazine writers are bloggers. So we went out and got ourselves a blogger,” said Glastris.
The Washington Monthly’s website today is fronted by a blog written by Kevin Drum, a former software marketing executive who, before joining the Monthly, had previously made a name for himself on his blog Calpundit. Drum is paid a base salary plus a commission based on advertising revenue. While he links to Washington Monthly print content, Drum has the independence to link to whatever he wants. Glastris describes the editorial relationship: “Kevin and I e-mail and talk all the time, sharing thoughts and story ideas. But we don’t really coordinate editorial tone. Whatever similarities in tone are evident has to do with the fact that we specifically selected a blogger whom we like and generally agree with.”
This strategy has been surprisingly successful. While the magazine has 30,000 readers, the website gets 50,000 hits a day, which puts it among the top 10 most-visited and linked-to political blogs in the United States. The number of visits to the site peaked on election night 2004, when the site got 199,999 hits. Interestingly, just as the Discovery Times Channel brought the Times a new audience, the Internet is bringing to the Monthly readers who Glastris believes are younger and more aggressive in their liberal politics than the print audience.
The growing online audience has attracted advertisers who are helping the website portion of the Monthly get close to breaking even financially. The challenge to Kounalakis now is to expand this success beyond the main website.
He has devised what he calls a “trade industry” publication model where Web pages will specialize in the different policy arenas. The strategy is designed to expand both influence and introduce a new revenue stream.
The strategy calls for the main homepage to remain a general political news website and blog, while specific policy discussions, such as healthcare or social security, will get their own home, linked like tentacles off the main site. In Kounalakis’ vision, “Those discussions will be at a high level. Not mass market. People who are focused on these issues can put work on the Web. We will try to develop the website to have a scalability aspect, while replicating the look at feel of The Washington Monthly’s current site. Each will be thematically specific.”
The hardest part of this expansion will be finding the right people to moderate and lead each specialized discussion. Kounalakis has targeted people already active in the topic areas. There is also minimal marginal cost since these new site hosts will be paid on commission based on advertising revenue, just as Drum currently is. Kounalakis is confident that such forums can not only be highly influential, satisfying the Monthly’s mission, but also attracting specialized advertising.
The mouse that roared
Monthly Associate Editor Carl Iseli likes to describe the magazine as “the mouse that roared,” because its influence far outstrips its size. Four years after taking ownership of The Washington Monthly, the Glastris-Kounalakis team is well on its way to making that a very loud roar.
As noted above, they have already doubled readership. Financially, the magazine’s revenue from advertising and subscriptions still does not cover its costs, but it is in the black when revenue from foundations and other funders is included.
The Glastris-Kounalakis team has found that rather than weakening journalism, its sharply-focused understanding of its business has allowed it to design a marketing strategy with a clear balance between the business and editorial objectives. “Today, we are now a modern, professional company,” says Glastris describing his magazine’s sustainable business model. For The Washington Monthly, business, after all, is just a means to a mission end, “There is an epic battle going on in the body politic and we are a part of it.” That’s why Glastris doesn’t mind working so hard.
You live here – or there
The billboards on buses driving around Washington, D.C., blare a conventional ad campaign with the slogan “You live here!” — boasting that anything you need to know about D.C. you can find on the washingtonpost.com website. But go to the site and an editor’s note advises visitors that they will now be greeted by one of two possible homepages: one for D.C. metropolitan residents heavier on local news, and one for those living outside the D.C. area, focusing on national and international news.
Offering a site customized to non-locals is part of the schizophrenic marketing strategy the general news website is deploying in its effort to expand readership both within and outside its home metropolitan area. The pressure to grow is the price of success for the decade-old washingtonpost.com website. The site has contributed to the profit of the entire Washingtonpost.Newsweek Interactive division, grew 32 percent in 2004 to $62 million.
So what have you done for me lately?
It’s easy to lose sight of the fact the washingtonpost.com website has already defied the economics of the Internet by making money as a general news site. What is more, it has done so by creating a successful brand extension of an established newspaper in a new medium while closely retaining the look, feel and values of the parent paper.
But that, it seems, is not enough. Faced with the parent newspaper’s diminishing circulation, pressure is growing within The Washington Post Company for the website to become a stronger profit center: The offspring can walk, so now it has to run. The site has to become something more than an interesting brand extension, it has to become a full-fledged business, and it has to do so utilizing a business model the core characteristic of which is giving away content for free.
Unlike The Washington Monthly, the primary mission of the washingtonpost.com is to make a profit. And the Post’s site is not a completely different product from the print edition, unlike the Discovery Times Channel’s relationship to The New York Times. Washingtonpost.com is a product born of a realization on the part of the parent company — just as happened at The Times — that the news industry is changing and that simply owning paper titles like The Washington Post and Newsweek is not enough. The transformation that followed changed The Washington Post Company into an “information” company with interests in print, magazine, television, and Internet operations, with the largest portion of its revenue coming from its Kaplan education unit which offers test preparation courses. The Post’s Internet play began in 1996 when the washingtonpost.com launched as simply the newspaper copied onto the Internet.
If only it were that easy
Almost immediately, it became obvious that the website and the newspaper are not the same product and are not used the same way. According to Douglas Feaver, the washingtonpost.com’s first online editor, “We quickly worked out that most of our readers look at us two to three times during the business day. We cannot wait to update. They want to be informed as it is happening. The website is about breaking news. Newspapers do not work on breaking news, this is a different animal.”
The paper version of The Washington Post works on a daily cycle, but the website has to be able to change by the minute. Feaver estimates the website changes as many as 80 times a day, ranging from typo corrections to whole new stories.
The different use and nature of the product called for a strategic redesign. The primary imperative became convenience for the visitor. Information had to be easily locatable and easy to access. The new strategy presented other advantages: The website could carry longer versions of articles or even stories that didn’t make it into the paper. In addition, stories could be posted as soon as they were ready rather than having to wait as much as 18 hours for international stories to be filed after the paper closed. But that advantage in timeliness meant that the newspaper that was now getting scooped by its own website.
There was one other advantage for the Web version of the newspaper. It was possible to track not only who the readers were, but how they used the site. It was perfect, instant customer information.
Web mystery: Making money
That knowledge about the reader became the core of the website’s marketing strategy. From the beginning, says Senior Vice President of Marketing Tim Ruder, it was decided that the washingtonpost.com would not charge for current content (there is a charge for archives), following a different model from The Wall Street Journal’s website, which is subscription only. (Meanwhile, The New York Times online has recently decided to charge for access to its columnist content and some other features.) Instead, the washingtonpost.com’s marketing strategy called for making money almost exclusively from advertisements.
That is where the audience information comes in. Ruder uses information from website tracking plus external market research to talk to advertisers on what he calls a “strategic level,” persuading them not just of how many visitors the washingtonpost.com gets but also helping them understand how technology is changing the way the audience gets its news. The washingtonpost.com advertising rates further reflect the tracking ability of the Internet: Advertisers pay only for users who actually see ads, rather than relying on print’s less accurate reader projections.
Just a click away
There is a another stakeholder that user information is directed towards: the users themselves. Research on audience habits is directly reflected in the evolution of washingtonpost.com — for example, in the introduction of the local and non-local home pages. That change grew out of the realization that while information on accidents on Washington highways was of special interest to a commuter heading home, it had little value for readers from outside the area. Though site traffic has been growing at close to 15 percent a year, with up to 11 million visits (some from the same readers) a month, most future growth would likely come from outside the D.C. area. And those users would need a more targeted offering. Another design change driven by audience tracking was the use of larger pictures which were shown to be popular when first used after 9/11.
With all journalism, audience information may change the shape or look of the product, but those numbers have little effect on editorial content. While the two separate home pages seek to reflect different viewer interests, the placement of stories is what has changed, not the coverage itself. Editor Feaver says it is a “question of striking the correct balance. There is the market imperative. But there is also the journalistic imperative.”
Feaver used as an example an abandoned trial site called myWashingtonpost.com where the viewer could customize the homepage. They were allowed to decide virtually all aspects of what appeared except for one corner. “As one editor said — they are not going to have a holocaust-free paper. It still has to be responsible journalism,” says Feaver. “Give them some of what they want but also what they need to know. We want people to read but we also have to maintain the core values of the institution.”
What’s in a name? Part 2
It is the Post’s core set of journalistic values that both Ruder and Feaver believe attracts the audience. As Feaver puts it, the audience thinks of it as The Washington Post’s website rather than as an unique entity in itself. As such, it is the brand of Post journalism that is the key value-proposition. That branding is then the focus of such campaigns as the ice cream truck mentioned earlier and the bus billboards discussed above.
Ruder uses two other conventional promotional strategies to bring visitors to the site: 1) targeted marketing on such sites as Google, where word searches will produce links to washingtonpost.com; and 2) radio spots in the local metropolitan community.
For now, as it works to increase traffic to the site, the washingtonpost.com team keeps an eye on the other Internet news websites, proudly announcing that it is on a par with CNN.com. But, as with the other case studies, the nature of competition here is changing. “It is a strange, strange world today,” says Feaver. “You are failing your reader if you do not have links, deep links, to the stories of your competitors and vice versa. So are we working together or working against each other and how do any of us make money from all this?”
While Feaver says he believes the shape of the online journalism business is still being worked out, he isn’t convinced the Internet advertising model is developed enough yet to deliver the kind of revenue the Post parent company now expects, no matter how targeted the marketing can be for advertisers. From marketing VP Ruder’s perspective, the key to growth is being ready for the coming changes in the news environment, specifically how people will increasingly migrate to the Internet as their primary source of news. The belief that more and more people are coming and they will not use news in the same way makes him confident that the washingtonpost.com can position itself so that an increasing number of users will be making the choice of which Washington Post home page greets them when they turn on their computer.
For all the punditry on how much trouble American journalism is in, there has been virtually no attention paid to healthy sectors of the industry as demonstrated in these three case studies. None of the organizations profiled has “sold out” to business pressure or sacrificed the quality of the product in the chase for audiences. Instead, they changed their models to use the most basic business principles to hone their own product. They have focused on what makes their product different (its competitive advantage), why anyone would want it (its value proposition), who would want it (their audience), and how to get it to them (distribution channels). Their success has been in understanding their value-proposition and being ready and nimble enough to adjust to changes in the market without sacrificing their core values.
The Discovery Times Channel built its success not only on a clear understanding of what the product is, but also why the channel was launched. However, it was forced to adjust its marketing strategy when it discovered the target audience was different than originally planned. Understanding that, Schiller and her team then found resourceful ways of circumventing their tight budget and limited control over their marketing channels, developing indirect approaches by targeting media writers, advertisers and cable operators. The Discovery Times Channel also succeeded because it understood that for all the programming being offered, no other channel was providing what they were proposing. Rather, the Discovery Times team saw its competition in changing technology and coming challengers.
The Washington Monthly’s rebirth demonstrates the core principle of understanding the product. Rather than try to find a new purpose in the changing political and media environment, the owners instead have focused on the magazine’s core nature as a mission-driven magazine. It’s as if they have recovered the original formula, dusted it off and given it a tune-up. With that product clearly set, and an understanding of their target audience and how the magazine could serve those readers, the new management demonstrated resourcefulness by marshalling its financial resources where it was most productive. Finally, the Monthly’s unconventional perspective — that it has no direct competition and instead should collaborate with other political magazines — opens opportunities unavailable under traditional magazine business models.
Washingtonpost.com had perhaps the greatest challenge of developing a product that honored the print parent while making money on the Web from free general news content. To do that, it made knowledge about the target audience a core competitive advantage, and then developed resourceful campaigns to reach that audience, including changing the product to appeal to new visitors, for example, introducing dual homepages. The fast growing website certainly measures itself against other current Internet competitors, but clearly sees its future in the changing patterns of how audiences get their news and how it can position itself to catch them when they come.
These case studies clearly demonstrate that the term “journalism business” need not be an oxymoron. The stories of the Discovery Times Channel, The Washington Monthly and washingtonpost.com suggest good journalism is not necessarily bad business. Rather, good journalism can, as these three demonstrate, be very good business indeed.
Amos Gelb has worked as a consultant for the Discovery Times Channel, as well as other clients.
1. There are an endless number of such writings, including: Gallup Poll, September 23, 2004; “Apocalypse Now! Reinventing Newspapers in the Public Interest,” speech given by Tim McGuire, Journalism and Mass Communications, Washington and Lee University, May 2005; “The Media, Losing Their Way,” David Broder, Washingpost.com, September 26, 2004.
3. In October 1999, the Los Angeles Times ran a 168-page Sunday supplement on the new Staples Center, seen as the core of rebuilding Los Angeles. It turns out that The Times had agreed to split the advertising revenue with the center.
4. Advertising on all three networks used to get access to 90 percent of the U.S. audience. It now takes 120 such buys across many stations to reach that many viewers, says Tim Ruder, vice president of marketing, Washingtonpost.com.
This paper was based on primary research from interviews and access to internal information from the three organizations studied. Most subjects were interviewed more than once, supplemented by repeated e-mail communication. The work would not have been possible without their cooperation.
The Discovery Times Channel
General Manager and Senior VP Vivian Schiller
Vice President of Programming and Development Bill Smee
Director of Programming Kevin Bennett
Marketing Manager Nellie Ryan
Marketing Manager Reenie Kuhlman
The Washington Monthly
Editor-in-Chief Paul Glastris
Publisher Markos Kounalakis
Associate Editor Carl Iseli
Vice President Marketing Tim Ruder
Washingtonpost.com former Executive Editor Doug Feaver
Kellogg School of Management/Medill School of Journalism
Charles H. Kellstadt Distinguished Professor of Marketing Bobby Calder
There were no texts available directly on the marketing of journalism. However many sites offered extensive research papers on various aspects related to marketing including audience information, content alternatives and the changing journalism environment. Sites consulted:
Online Publishers Association
Independent Press Association
The Radio Television News Directors Association
The Poynter Institute
The Readership Institute
The American Press Institute
The Newspaper Association of America
Magazine Publishers of America
The USC Annenberg School Center for the Digital Future
The Electronic Newspaper Information Service
A.C. Nielsen Ratings