To charge or not to charge for the news

 An Interview with Martin Baron

Martin Baron, the Boston Globe’s editor, sat down in his office with CommonWealth magazine editor Bruce Mohl (a former Globe reporter) to talk about the paper’s financial situation and its digital transition. This second installment of the interview is only slightly condensed.

Mohl: When the New York Times decided not to sell the Globe, did they do that because they really wanted to keep the Globe or did they just not get enough money from bidders?

Baron: You’ll have to ask them. I don’t do an interpretation.

Mohl: Is that the way you’re going to answer any finance question about the Globe?

Baron: I might. It depends on the question.

Mohl: The New York Times said early last year the Globe was on track to lose $85 million. Then came the givebacks from the paper’s unions and the $85 million loss seemed to evaporate. I hear you’re now breaking even on a month-to-month basis. What’s the story?

Baron: I can’t talk about our financial condition, but keep in mind, as the company has pointed out, obviously the sacrifices that people made – and they were real sacrifices – represented savings to the company. That’s why the company asked for them. There were also cuts in the compensation and the benefits for management employees. There was a significant plant consolidation, shutting down the Billerica facility and consolidating production here in Boston. That produced significant savings. And on top of that, as we’ve reported, we implemented a price increase. In a very gratifying fashion, people seem to recognize that it does cost significant money to produce quality journalism and they seem willing to pay more for the journalism we do. On top of that, the economy has been inching back. That’s come in the last few months. As we’ve indicated, the trend is in the right direction. The New York Times Co. has said most recently they expect the Globe to be a positive contributor to the Times company in 2010.

Mohl: In that estimate of an $85 million loss, was the profit from included or was it just the Globe?

Baron: I think that was the Globe. But separating out can be very difficult since almost all of the content comes from the Globe.

Mohl: Wouldn’t a lot of the revenue from be profit since most of the costs are borne by the Globe?

Baron: No, come on. Look, there’s an editorial staff. There’s a technology staff. There’s a development staff, there’s an advertising staff — well, advertising is part of the advertising department. There are all sorts of costs associated with

To say that all the revenue from is pure profit is just false.

Mohl: How many newsroom employees do you oversee?

Baron: The traditional Globe newsroom is about 340 people, and then we have 30 editorial employees for

Mohl: How many employees did you oversee when you came to the Globe in 2001?

Baron: I can’t off-hand cite the numbers. It went up a little bit [after I arrived] because we expanded our zone regional operations. The peak was about 550 for the traditional Globe newsroom. That didn’t include because that was separate at the time.

Mohl: Will the newsroom shrink more or is the current size about right?

Baron:  I would always love to be bigger, so I never want to say it’s about the right size. Look, our staffing depends on our budget. Our budget depends on our revenues. It’s pretty simple calculus. If revenues decline, then obviously that has an impact on staffing not just for the newsroom but for everybody in the company. I think we’re relatively stable at the moment, but we continue to look for savings wherever we can find them.

Mohl: The price of the print newspaper shot up pretty dramatically last year, to $12.25 a week. Are you trying to see what the market will bear?

Baron: You’ll have to talk to the business side more about that. Typically, consumers didn’t pay the full bill of the journalism that they received. That’s just a fact. They paid a small percentage of the journalism they received because advertising paid the rest of the bill. Now, with the change in the advertising conditions, advertising doesn’t pay the full bill even with the smaller budget for the Globe and for its journalism. So we have to ask consumers to pay more. That’s something that’s not happening uniquely at the Globe. It’s happening at other newspapers as well. It’s just necessary.

Mohl: Circulation has fallen dramatically at the Globe (to 264,104 Mon-Fri and 418,259 Sun. as of Sept. 30) and may fall further. But are you encouraged by people willing to pay the higher price?

Baron: It is encouraging. We’ve received a lot of support from people in the community and particularly readers. The most significant support they can give us is to subscribe to us and we certainly appreciate that

Mohl: How long do you think the Globe will continue to print the newspaper?

Baron:  I’m very skeptical of people who predict the death of print. I remember 20 years ago I was at the Los Angeles Times and Ted Turner came to visit. He said within 10 years, because of 24-hour broadcast television, the LA Times would be out of business. Ten years passed and the LA Times was not out of business. Whatever troubles it faces or any other newspapers face these days is not because of 24-hour cable television, that’s for sure. It’s more because of the Internet and what that has done to the advertising market.

The other piece of evidence I would point to is that an outfit like Politico, which started as a website, also created a print product. If you look at their SEC filing — and you’ll have to check these numbers — they have something like $20 million in revenue, $7 million is from their website and $13 million is from their print publication which comes out five days a week. [Actual numbers are $11.3 million print and $7.3 million online in 2009.] They would probably not be profitable if they did not have a print publication. So here is an organization that had its origins on the web, which feels the need to have a print publication in order to be financially successful.

Mohl: Do you plan to start charging for

Baron: Everybody is searching for what the new economic model is and the truth is that nobody exactly knows. It’s a period of dramatic change and dramatic transformation in the way we do our work, what people expect from us, how they get information, and the business model behind it all. Certainly a lot of people have a lot of theories about how that’s going to evolve but I’m not sure there’s anybody who really knows.

Mohl: What’s your theory?

Baron: I don’t have a particular theory. I have a feeling that we should adjust as circumstances change, and they’re changing very rapidly. Look, people weren’t walking around with the iPhone three years ago. There was no iPhone. There was no Facebook. There was no Twitter. There was no YouTube. There was no Flickr. There was no Google. People take these things for granted now, but they’re actually very recent developments. And now mobile devices – iPhones, Blackberries — and the new tablets that are coming on to the market are changing very dramatically how people get their information. I’m certainly not equipped to predict how technology is going to evolve.

Given the speed of change, it means we need to have an organization that’s prepared to change and equipped to change as rapidly as the technology is changing and as rapidly as people are changing their news and information consumption habits. We have to hang loose and we have to accept that uncertainty is part of our business today in a way that it was not when many of us got into the field. That’s unsettling for a lot of people but in many ways it makes us just like a lot of other businesses.

Mohl: So where are you on the question of charging for web content?

Baron: Like everybody else we’re exploring what kinds of models might be out there. I don’t know where we’re going to end up any more than I know where anybody else is going to end up. There’s a lot of discussion, a lot of exploration, a lot of speeches. There are different ideas, even different theologies about the proper approach to the web. There are those who say information wants to be free, and those who say you have to charge and can’t just give away this stuff. Then there are people in between.

Look, people talk about the Wall Street Journal as a pay site. In fact, it’s not entirely a pay site. If you copy the headline and plug it into Google, you’ll get it for free because they make it free for all people searching on Google. They want the Google traffic, despite their railings against Google, at least Rupert Murdoch’s railings against Google. It’s not really a pay site. It’s a hybrid site. The reality is we do have good advertising success on our website, at least relative to other news organizations our size. We certainly don’t want to put that in jeopardy

Mohl: It seems like it would be an easy decision if everyone started charging for online content, but that’s unlikely.

Baron: We’re in a competitive field. Because anyone can start a blog, they can get into the business at virtually no cost. That’s a classic definition of what a free market is – the ability to get into a business with virtually no entry barriers. One kid can start an international television network sitting in front of his computer if a camera is attached to it. Overnight he can be broadcasting to the entire world. That’s a different phenomenon than we have ever faced.

The reality is that’s traffic, its unique visitors, and its page views are far in excess of any other local news outlet by a wide margin. We’ve had tremendous success in bringing people to this site. Depending on the month, among newspaper websites, we will rank somewhere between six and eight. We are not the sixth largest newspaper. We aren’t even the eighth largest newspaper. We’re somewhere between 16 and 18 in terms of the size of the newspaper. We dramatically outperform on the web and we dramatically outperform any other news source here in the Boston area. You don’t want to put that at risk. You don’t want to take all that work and success and undermine it overnight by putting in a charge that would perhaps lead to a dramatic dropoff in traffic. You’ve got to weigh that against the type of money you would earn, too. There are a lot of potential models between everything’s free and everything’s pay.

Mohl: Do you lie awake nights worrying about this stuff?

Baron: I don’t because usually I’m so tired by the end of the day that I sleep pretty well.

Mohl: Is there a process you are going through to reach a decision?

Baron: Believe it or not, we actually do go through some rigorous analysis of what makes sense and what doesn’t make sense. That’s a process that’s been going on for quite some time. I participate in that. Other people participate. Ultimately, it’s the decision of the publisher and the executives of the New York Times Co. There is no timetable that I’m aware of.

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