Right of Reply: The Future of the Free Press

Richard Kramer: Welcome to Bubble Trouble, conversations between the independent analyst, Richard Kramer, that's me and the economist and author Will Page where we lay out some inconvenient truths about how financial markets really work. It's the only podcast that shows clear correlation with the stock market. That is when the market goes down, our audience seems to go up. So welcome to our many new listeners. This week we give the right of reply to an earlier podcast that aired in early August of this year where I quizzed my co-host Will Page on his presentation to a congress of publishers. And that conversation raised more than a few hackles in the publishing community and opened a can of worms on a subject near and dear to our hearts, the future of the free press and how to pay for quality journalism.

We emphasize here the word free, as it seemed based on Will's work, very few people are willing to shell out for excellent reporting or even entertaining stories. To do what quality journalism does best and ensure balance in our podcasting, we want to hear the other side of the story about business models and welcome James Hughes, CEO of FIP to the show to give him the right of reply. Buckle up, more in a moment.

Will Page: So we're gonna welcome James Hughes, who was in the room in Portugal when I gave that presentation that was on the podcast we heard in August. James, do you wanna just explain a little bit about yourself, your background, what FIP is, have a shot at pronouncing it because we failed last time, right?

James: [laughs].

Will Page: But really important, tell our audience how they can follow your fine work.

James: Absolutely. Thank you. Well, thank you both to begin with for inviting me on this podcast. It's a pleasure to here. And I feel as though with the right of reply that I should be taking massive issue with all the things that you said in your addition of the podcast in August. I'm not gonna do that, but there are a few things that we should pick up on and discuss where there were definitely a few points of contention. I've, I've been a publisher, I've been in the publishing industry for more than 20 years. I worked for 12 years at the BBC. I worked for five years in the Middle East publishing magazines and newspapers and digital versions of brands across multiple markets, I've operated internationally. And for the last five years I've been running FIP and FIP. We don't use the longer version of the name, so I'm not gonna try and pronounce it again.

Will Page: [laughs].

James: We're now just an acronym like all good businesses are. We started as an organization for magazine publishers. We're 100 years old. We're very old organization. We've evolved over the last few years into becoming an organization that is very much about content creating businesses, so media owners, professional journalists, people who do this for a living. And really we focus on trying to help them understand business models around journalism and how they can pay for the fanta- how they can get paid for the fantastic content that the, that we create, that they create, and really trying to solve this conundrum, this dilemma about having a product and a service that everybody seems to want, but which very few people seem to want to pay for.

Richard Kramer: So Will raise some extremely skeptical points about the newspaper industry and its ability to elicit payment from audiences, which they know are engaged. And we can talk about all the intermediaries that stand in between the content and the end consumer and their wallets. But tell me, what was your initial reaction and why did you get in touch with Will after hearing the podcast and wanting to right of reply?

James: Well, I think because like all good and clever people, he's half right and half wrong. So the half right piece that we can talk about later is pricing, which we've, we've taken reactions to Will's views on pricing. We can talk about that later. And I think there's a really interesting point to be made there. But the point I wanna pick up on is the lack of similarity between what the news industry or news and magazine industry is trying to do and what the music industry is trying to do. And that's the point that you were discussing in your podcast about the difference between the label, in which in the case of our industry is the masthead and the artists or the content in the...

It seems to me that you've got in music, this ability to disintermediate the label, you don't really care who produces the music. What you're interested in is what the music itself sounds like and who the artist is and you're following that artist. That has not been, and that, you could argue that has always been the tradition that even when Elvis was producing singles, nobody really cared that they were produced by, you know, who they were produced by. You don't even care what the label was. You were interested in Elvis. Now that's not always been the case with journalism. In journalism, we've always had this funny duality between let's say the 5% of journalists who people might recognize by name and the mass of media brands out there that people absolutely do recognize by name and follow. And there's always this kind of push and pull between, are you following the FT or are you following their lead columnist? So it's not quite as clear Kuss saying that you can just disintermediate the masthead and the brand in our space.

And I think that was the area really that we wanted to, that I wanted to explore most with you because what we've been doing since Will's talk as we've been going out and talking to the industry and talking to interested parties, is we've been using some of the stuff that he presented to say that music has had its streaming moment and the streaming moment has saved the industry, and the data that Will shared showed that the music industry is bigger now than it was in its, in its physical heyday. That is not the case for news and magazines. I'm gonna call it publishing, for publishing. It hasn't had its streaming moment yet.

Richard Kramer: And if I want to just pick up on one simple point there, when we look at these labels, there are three giant labels which control effectively all the mastheads. And if you ca- wanna subdivide the mastheads into categories like jazz, funk or reggae or classical or hiphop or what have you, they all have their creators. They all have their stables of artists that group together as creators, but-

James: Yeah.

Richard Kramer: ... do you think the situation would be any different if there were three giant organizations that owned all of those mastheads? Is an issue that the, the industry is just simply too fragmented to share a common approach to getting people to pay for the content.

James: I mean, it's an interesting, it's an interesting theoretical exercise, isn't it, to extend that out into a future for journalism where you might be able to say, "Is it possible that you could have your hypothetical three organizations that controlled journalism and then you had a bunch of creators within that who build their own followings and you have a kind of streaming service, a streaming type service that enables people to consume that content?" I think the, the issue with that is two twofold. Firstly, we're not talking about the same thing. There is an apples and pairs thing here. So there is news and comment and opinion content, and there is entertainment content. If you're talking about entertainment and lifestyle content, could I see that happening at some point in the future? Yeah, you might be able to see that happening. You might be able to see entertainment and lifestyle content coalescing around a smaller number of larger creators.

And arguably that's what's happening at the moment. So if you look in the magazine industry over the last few years you had an enormous amount of M&A activity. For example, Meredith have bought Time Inc.

Richard Kramer: Yeah.

James: They have now been bought themselves by Dotdash, that's created a lifestyle behemoth in the US market targeting women audiences. So that's happening. The problem is the other side, the pair. So if that's the apple, the pair, which is news and comments, which is politicized. And I think that's the difference between music and news content. News content has a political dimension. I know some music has a political dimension as well, but not to the same extent. But news content has a political dimension and I think that's where that collaborative piece falls down in that it's difficult to see a single stable being comfortable publishing content that is supporting the left and the right-

Richard Kramer: Across the spectrum.

James: Yes, across the political spectrum. And that's quite hard to see and be incredible, because the readers of that content are part of a tribe and they want to feel as though the people who are publishing that content is also part of that tribe.

Will Page: Conscious. I mean, Richard gonna be tugging you in different directions in this podcast. I am feeling the conversation so far. Let me just tug you back to that earlier remark you made-

James: Yeah.

Will Page: Where you said, do people read a particular journalist for the FT or do they read the FT which has that particular journalist? Now, do I subscribe to Netflix, which happens to have House of Cards? Or do I subscribe to House of Cards, which happens to be on Netflix-

James: Yeah.

Will Page: ... and the music, we talk about the brand or the band. Now, if I go way, way back to the millennium where the internet upended both of our businesses.

James: Yeah.

Will Page: Record labels used to sell CDs to retailers by the weight of pallet.

James: Yeah.

Will Page: I would go up to James Hughes record shop and say, "I got a pallet of CDs." And James would say, "No, what's on it?" But how much does it weigh? About 40 kilos. I don't know what's on there. Schneider Twain, it's all gonna sell, but that's the weight of the pallet CDs.

James: Hmm.

Will Page: And that's been completely overturned with data science consumption, analytics on streaming, et cetera. But in your world, back then used to measure newspaper popularity by counting how many newspapers came back to the factory gate, not what, how many got sent out. That's still, without being too derogatory here, the way it works today. So how does a newspaper know whether I went to the FT to read bookmasters or went to find bookmasters who happened to be on the FT? How do you know?

James: Well, that's a very good point. And you could make a whole pod- a podcast on the history of measurement in the industry, in the print industry publishing industry. I think there's a, again, a divergence between print and digital. In the digital world of course they know that. I mean, they know with a great degree of granularity what content works. And actually the degree of sophistication now in our industry around using analytics to drive behavior of the newsroom and to drive marketing strategy is actually reasonably good. In the print world it was always a problem. And actually it was a problem that we could afford to ignore for a long time. Yes, you're right. We did measure success primarily in terms of the number of copies that were returned, which you could then equate into the number of copies that you had sold and invest on.

Will Page: [laughs] I just love that story.

James: Yeah. But that's as, as you've indicated, it's not an uncommon behavior at that time. There were, there are, and there, there remain mechanisms for measuring readership. So it wasn't the case that we then just put that into the void and assume that everybody read every copy. We had a reasonably sophisticated model for measuring the number of readers per copy for trying to identify how long they were spending with each copy. And that would lead to readership number, which would give you your overall audience. Was it perfect? It was no less perfect than this equivalent system for measuring radio or television audiences.

Will Page: Hmm.

James: And it had, and it was currency, it was used as currency by the advertisers.

Will Page: Hmm.

James: But what, but I think what you're getting to there Will is to kind of fundamental shift that has happened in the industry. So if you accept that the shift in music has been the shift from owning to renting, and the label's getting comfortable with the idea that people don't need to own music, they can rent it through Spotify. I think the shift in our industry in publishing has been the shift from indirect to direct monetization of content.

Will Page: Hmm.

James: You've gotta remember for 100 years, the industry was fueled by this enormous boom in advertising revenue. And it paid for everything. And it was enormous. I mean, if you look at the chart, it's a amounting-

Will Page: Paid for every- it paid for everyone's lunch.

James: Paid for everybody's lunch, paid for their martinis, on, on, on the Mad- Madison Avenue. It was absolutely fueling that mad men style boom in in the media world. And it did that for 100 years, probably a bit less than 100 years. You said in, in the podcast in August that we'd lost all of the revenue that we'd had in advertising in print since 1999. That's not true. We've actually gone back in real terms to where the industry was in 1945. We've lost all of the gain in print advertising since the war has disappeared in the last 20 years.

Will Page: If you'd break that down between what I used to read as a kid to, to find bits and pieces, the classified ads. Which were a huge money spinner for local media.

James: Yeah.

Richard Kramer: And the full page ads in the national tabloid or newspaper of record, is it really the classifieds in that local advertising that's been lost out of the pool? Or is it the loss of reach in the national level?

James: So they were part what, classifieds was the canary in the coal mine. They were the first thing to go when digital media started taking off. And when there was, after the first.com crash, when people really started using it-

Richard Kramer: Yeah.

James: ... consumers started using it. I mean, I remember working at that newspaper in Dubai that I worked out in, in 2006. So prior to the time that I was there, they actually reached the physical capacity limit on their printing machine. The machine could not print any more paper and stick it together to put classifieds in. They had so many, and they were making so much money, it wasn't even true. Now, of course, they have almost no classified advertising, so, so the smart players in our media, in our market moved into digital classifieds and made a lot of money out of that. They obviously stand out as Axel Springer, who made a ton of money out of digital classifieds over the years, and they saw that coming first.

But I think Richard, what then happened was that the display advertising, the quality advertising that would sit in the front of the book, the front of the magazine or newspaper, then also migrated online. And what you've ended up with is a situation where we could see the cliff coming. And if you look at the graph, it is a cliff. You could see the cliff coming. And that then sparked the initial debate, which was, okay, how are we gonna do a one for one substitution? How are we gonna substitute 100 million pounds, let's say, of print advertising revenue for 100 million pounds of digital ad revenue? And the answer of course now is that you can't, it's impossible. So that's lead-

Richard Kramer: Or 100 million of subscription income.

James: Yeah. Well, so there's two aspects to this. The first one is, the first revelation that people have finally woken up to is that print, digital advertising will never be as big as print advertising was. It just won't. The graph, every graph you see is just impossible. If you extend the line out to infinity, it never gets as big as it was, even as big as it was in 2010, nevermind in 1999. So that's the first thing. The second thing is that you then have got to diversify your business. And diversific- and we talk about this a lot. Diversification is not substitution. So the mantra we give to everybody, you have not succeeded if all you've done is swapped reliance on ad revenue for reliance on digital subscription revenue. You've got to have three or four or five different ways to make money so that when the next crisis comes down the track, you've got insurance, you've got insulation in your business.

The 21st century is a century of crisis. All we've known is crisis. There will be another one along in a minute like a train. So when that comes, you cannot tell what the impact is gonna be on your business. And you've got to have a business that's resilient enough to survive any shock that comes to it, and you don't know where that's gonna come. COVID was a great example. What happened in COVID? Print subscriptions for most magazines went up for the first time in God knows how long, that you could not have anticipated that would happen in a crisis.

Will Page: So let me give you another crisis coming for the quality journalism world, which is when you have algorithmic serving of content, whether it's via TikTok or Twitter or Google accelerated mobile pages or what have you, the whole notion of premium content goes out the window, because someone else is playing the mega editor, the meta editor, if you will, of all the content you get to see. So you may feel as an FT or New York Times or WaPo or whatever journalists that you're coming up with the best investigative work. But if the algorithm of those platforms where a lot of young people are getting their news right now don't feature you and don't serve you up, you can be as premium as you like, you're not gonna get paid, you're not gonna get attention.

James: Yeah.

Will Page: So how do you unwind this monstrous disintermediation that's happening from all these tech platforms, which is increasingly becoming at the whim of algorithms that may or may not be controlled by a malevolent actor like the Chinese Communist Party, or may just be controlled by whoever's click bait is the quickies bast of it all.

James: Exactly. I mean, you're absolutely right. The answer is very simple. You treat these platforms like what they are. They are publishers, they're not aggregators. As soon as you have somebody making a choice, whether it's a piece of software or a human being, you're a publisher because you're editing the user experience. And as soon as you're editing, if I do that with a newspaper, if I do that with a website, I'm regulated by a media regulator that will come along and tell me whether I've done something wrong, whether I've broken the rules.

For some reason, YouTube and Google and Facebook and all these other folks that do algorithmic based content recommendation have managed to get themselves excluded from this. We think that's wrong. We think that they should be treated as editors. And this has been the major thrust of the legislative activity, the policy or the, the lobbying activity that we've tried to do over the last 20 years is to say, "Look, look, po- politicians, these guys are editors and you should treat them like editors."

The algorithm is a fascinating one, and this is where you mentioned it on your last podcast, and this is where I would take a, a right of reply. In the music world, the algorithm is an absolute positive, good for the consumer, it, on Spotify, it leads you, me, anybody into places that they wouldn't otherwise go and gives them interesting new suggestions that you can accept or reject and without any great harm to you. On something like YouTube, the algorithm can be very beneficial and it can be massively detrimental-

Will Page: Hmm.

James: ... if it starts to lead you down rabbit holes that you don't necessarily want to go down or shouldn't go down. And I think you could, again, you could do a whole podcast about this, but there's a, there is a degree of responsibility. Spider-Man is always right, with great power comes great responsibility.

Will Page: [laughs].

James: The great responsibility that the platforms have in this case is that not all content is equal. Not all content is equally created. Not all content is equally good. And frankly, not all free speech is good, and almost sick and tired of this kind of liberal wishy washing thing that we do of going, "Everybody should be able to say whatever they want." It's like they really shouldn't. There's some stuff you just shouldn't say and you shouldn't be serving that up to people. And that's the job that we do as journalists. Not censorship, it's quality.

Richard Kramer: Yeah. I tell you there, there is, however, a nefarious angle, which is common to Spotify and TikTok and Google and others, which is they serve up the content which on which they get the highest margin.

James: Yeah. Absolutely.

Richard Kramer: So you could see the outcome-

James: There is no public good test, there is no public good test in what they're doing. And there's no public good test in an algorithm. Now, maybe I've sound old fashioned and the concept of a public good is out outdated in this kind of repat- capitalist society that we live in. But I think for journalism where it has the potential to have such an impact on how consumers think and act, you do have a public responsibility with the content that you are creating and you have to be aware of the impact of that. And if you are somebody like Mark Zuckerberg, they just don't believe that's true.

Richard Kramer: But how do you, and one of, one of your, one of your founding members I'm sure is News Corp, and how do you deal with the fact that the Australians were, were coming down like a ton of bricks on Google and Facebook until Google signed a global deal with News Corp and everything was fine. And so wasn't it just about the money, wasn't it just about the division of spoils instead of these highfalutin ideals of public goods?

James: Well, look, come on, everything's always about the money, but everything is also about the principle. And I think what, whilst people may take issue with News Corp cutting aside deal with Google and Facebook, I actually don't take that much of an issue with it because they're commercial companies they can do what they like. That's a regulatory failure. That's not a commercial failure. I think the important thing there is that the principle of paying for content has been established. And once that door is open, once that principle is established, you can then start to have meaningful negotiation either at an industry level or an individual basis to get rewarded fairly for that content. Are we rewarded fairly? Are News Corp rewarded fairly for their content at the moment by those platforms? No, probably not.

Richard Kramer: Yeah.

James: Yeah. So that's still got somewhere to go. But once the door is open, you can start to have that negotiation and over the course of the next 10, 20, 30 years that negotiation will happen and we'll get to a level where we're comfortable with the amount of money they're paying us. But that's absolutely regulatory failure. It is not, you cannot blame a commercial organization for taking a deal that's in front of them.

Richard Kramer: Hmm.

James: Just as a, sorry, just as an addition to that, right? I mean it's easy to focus on the News Corp thing. Think more about the small regional newspaper in a country like Slovakia or Finland or Brazil who's offered 20 grand by Google. Now 20 grand for one of those companies might be a ton of money. It's very hard when you're a struggling local newspaper to say no to that just because there's a bigger principle at stake. So there's two sides to that coin.

Will Page: I wanna get into the soft money of Google in part two. But to close out part one, I'll just stress, I am of the other end of the spectrum of Richard on this how to regulate the internet debate. But you put forward a really persuasive case and listening to you put forward that case, maybe think about one observation in the world of social influencer marketing, which is dark, deceitful, and various other D words-

James: And it's not journalism, we should be...

Will Page: Very much so, but it's drawing a crowd. And what do journalists wanna do? Draw a crowd. What do social influencer marketing do, drawing crowds, crowds are drawn wherever crowds are drawn. That's the issue. But you know, one of the most flourishing professions on social influencer marketing is, freelance surgeon advertising BBLs to young women. And you know what a BBL is, right?

James: Yeah, yeah.

Will Page: You have one?

James: Got one myself. But you know.

Will Page: But for those who don't, Brazilian butler, but that is one of the biggest flourishing professions in the world of... Now my point is you don't see freelance surgeons advertising BBLs on ITV or Channel 4, but you do on the unregulated market of TikTok and Instagram.

James: Well, there's-

Will Page: The Crowds are watching video TV. They are being drawn in Instagram and TikTok. So it's strange how we regulate where the crowds are not, but we're not regulating where the crowds are.

James: Yeah.

Will Page: That's a bit where the rubber hits the road.

James: Yeah. And that's a problem. But there's a good, but that's actually quite a useful parallel to use, right? Would you feel comfortable with some bloke that you discovered on Instagram operating on your bottom?

Will Page: Not if I'm under the knife.

James: No. So why is that any different from journalism? Why would you take advice from some bloke on Instagram about whether a COVID vaccine is effective or dangerous or not? Right? The, this, I used, I'm not gonna use the F-word now, but I used the F-word when we were talking about it earlier. It really pisses me off, right? Influencers are not journalists. Journalism is hard and it's a long, difficult process to become a journalism that requires training and requires certification, all the rest of it. Just because you've got a million people on Instagram doesn't necessarily mean that you're right or you know what you're doing. It just means that you're a circus.

Will Page: You're, you're damn right with this right of reply, James, you're damn right. Let's take it to the break and we'll be back in part two to go deeper on this topic. Thank you so much, James for joining us on the podcast back in a moment.

Richard Kramer: Welcome back to part two of Bubble Trouble with our special guest James Hughes, CEO of FIP, talking about the free press and how to pay for it. He's been given a right to reply to Will in this session to take him to task for some of the assertions he made, rightly or wrongly down at a speech in Portugal. I'm gonna hand it over to Will to throw out a few of those assertions and see how James replies.

Will Page: James, I want to imagine that your industry is stuck in the middle of what I'm gonna call a Bermuda Triangle. Now, triangles have three points. I'm just gonna walk you through those three points. At the North point on the triangle, you've got Apple bundling news into Apple News, is then bundling Apple News into Apple One. At the southeast point of the triangle, you've got the Google News app, which by the way has had more downloads than the rest of the newspaper apps combined. It's a beautiful app, but it makes a purpose of paying for news even more remote. I mean, it's so great, I just can't understand why you'd want to pay for news ever again. That is not the desired reaction you should have, but it's what it does to me.

And then at the other end of this triangle, southwest point, you've got sub stack journalists peeling off the concept of working for the man and working for themselves, owing 100% of their copyright, seeing 90, 87% of all the revenues they generate and having nothing rejected at the copy desk. So you've got bundling, you've got free cards, and you've got DIY journalism. It's not a nice triangle to be in, but that's, I put it to you, it's, that's where your industry is stuck. And I'm not sure how you get out of it.

James: I would take issue with that. I don't think it's a triangle. I think it's a diamond. And at the bottom of the diamond is the publishers themselves. Because if you look at the two, you mentioned two aggregators and one unbundler, if you wanna call it that. The, the unbundling journalists. The two aggregators, Apple News+ and Google News. I mean they are contributors of interesting revenue and interesting audience to the industry. It's interesting, but it's not life changing for most people. Despite those products having been around for a long time, despite having lots of investment, they are not alone. There are four or five others that you could mention out there that do a variety of, of the same thing. Flipboard, for example, or if you wanted to go back to more traditional reading methods board.

Will Page: Flipboard. Yeah.

James: People still use it.

Will Page: Which, which was supposed to be the original Apple News, but they would never sell to Apple, much the annoyance of all their staff.

James: Yeah, and you've got thing, you've got services like Press Reader and Zinio and Reedley who are aggregating the kind of legacy content and repurposing that as well. In aggregate those together. Are they a significant source of revenue and audience for the publishers? No, they're not. They're an interesting source, but they're not significant. I'll come to the bottom of the diamond in a minute. The sub stack is really fascinating and I think Substack is actually a net good for the industry. If a journalist gets to the point where they are motivated enough and well known enough to go off and do their own thing and start their own platform, their own publishing platform, which is what Substack basically does and it's publishing platform in a box for you, then that's probably a good idea because there's no difference from that, from the old days of them running off and starting their own newspaper.

The difficulty there is that in order to get to the point where there's enough people who are prepared to sign up and pay for your journalism, people have to know who you are. And Substack as yet is only capable of doing that for a relatively small number of journalists. So I think the, the position of big brands with Substack is the same as the in-house journalist versus the freelancer. At some point the in-house journalist goes off and becomes a freelancer. Very often they go with the organization's blessing because they become big and important and talented and celebrated. There isn't really no problem with that. I think it's probably a healthy thing. But the interesting part is that is the bottom of the diamond. Why, why are publishers still in the game? They're still in the game because although they haven't been successful at necessarily doing much about it or doing much successfully about it, they have understood the importance of first party data.

And what the other three things don't give them is the first party data that allows them to do all the other stuff that isn't just about putting some words in a photo on the page. And if you think about things like audio, like doing podcasts, like doing video, like doing events, there's a whole ton of stuff that these publishing organizations do that you need, for which you need an organization around you. And for which the aggregation of audience actually does make sense. And which is a, a benefit not only to the consumers, but to the individual journalists themselves.

Look at podcasting charts, we're on a podcast. Look at podcasting charts. If you look at news and current affairs and you go on the tile on Apple, the Apple podcast app, almost every single tile is occupied by a podcast that has a major journalism organization, the BBC or NPR or whatever-

Will Page: Fair comment. Fair comment.

James: There are very few, I think there's one, uh, which is the John So- one that's at the John Sopel and they may, this one, which is the top of chart at the moment, which is a global radio podcast, is not a, is not a strictly speaking standalone, which is presenter driven rather than brand and-

Richard Kramer: But that's, but that's really built off the credibility of a leading news organization and the the others you see-

James: Yeah.

Richard Kramer: You see NPR, you see the New York Times daily always in that top, top tier.

James: Yeah, that's right. So it's quite hard to establish yourself as a meaningful 360 degree media operation as an individual journalist just by using Substack. That's what publishing brands are and that's what they do well. So I don't think that triangle is necessarily a Bermuda Triangle where the ships are sinking. You can sail to all four ports simultaneously if we want us take this torturous metaphor and extend it. And then there are a whole bunch of other ports off, o- over the horizon as well, which are the things that record labels don't do anymore. Like the, the analogy of organizing a concert, organizing an event. Well, for somebody like the Wall Street Journal, Dow Jones, that's a huge part of their business. 20% of their business is events. And that's not even on your diamond.

Will Page: You've opened up so many rabbit holes. I wanna go down each one of them. Like one thing in my head is just on the one of our Metaverse podcasts, we were discussing whether films become VR games first and movie second, makes me think, do newspapers become podcasts first and newspapers second? I mean, how does this market evolve? But I wanna resist that temptation just through go to the jugular for you here, which is-

James: Hmm.

Will Page: ... one thing I loved about FIP and all your members, yourself, Yulia, the whole team there is, there are collaborative thinkers. They're putting cards on the table. I compete with you, you compete with me, but there's a bunch of best practice we can all learn from. That spirit I want to champion on this podcast. I love it, love it, love it.

James: Yeah.

Will Page: But the one thing that the collaborative thinking brought to me was, do we need to Spotify for newspapers?

James: Yeah.

Will Page: And the way this one tees up is as follows, the ratio of people of paying for music, and it's voluntary to pay for music versus those who pay for news, and it's voluntary to pay for news is 10 to one in this country, 20 million plus people are paying a monthly fee to get music. Less than 2 million people are paying for newspapers. In America, and I don't know how Richard's gonna feel about this, but Joe Rogan show, which employs four people, gets to more Americans, then the entire newspaper subscription combined get is what I would like to see get solved. Now is the right way to solve it is just to go who clean sinker and say, subscribe to all newspapers and all the journalists and all the titles for a flat fee per month and I'm giving you the option value, not the value of getting to the Times, but missing the articles in the Guardian, I'm giving you the option value to know that you've got everything. Do you think that could 10X in newspaper business?

James: It's a fascinating question. I mean Apple would argue that's what they're trying to do with Apple News+, although not everybody's signed up for it. I think there's a generational thing in this in a way that's not there in music. I think if you're talking about anybody who's over the age of 35, they're still wedded to the masthead, the brand, the news brand, and they understand the value of the news brand and they want to, they understand which brand they're affiliated with from a philosophical point of view, from a political standpoint, whatever. And they're very happy and comfortable affiliating with that. I suspect that younger audiences don't feel that way. And so launching that kind of platform might be a way to attract Gen Z and then in the future, Gen A audiences who are much more neutral, much more brand agnostic and are much more interested in the content.

I mean, one of the things that we've always had to contend with as we moved into the particularly the mobile world, is the fact that your news goes from being a headline under a masthead to a card. And the card is basically the story with the headline and the text on it and very little reference to the brand, minimal reference to the brand. So that's already happening in the way that news is being consumed on mobile. So the short answer, is there a revelatory moment where you could create a product like that and it would solve the news industry's problems at the same speed with which Spotify solved the music industry's problems? No. Is it something you should do with one eye on the 20 year, 30 year horizon? Yes, you probably should. It certainly would be worth exploring. I just don't think th- there is enough momentum in that direction at the moment to make that a kind of damacy and revelation that would solve the, solve the problem.

Richard Kramer: I guess. I'm sorry, you're, you don't see that for now because I guess my own experience, and I don't wanna extrapolate from that, but I think there is a desire to engage with a wide spectrum of content and a need to, in a way serve up content that not be contrary to long held views or the masthead that you're, have allegiance to. And the problem for my kids' generation is that the price of entry, I think Will you calculated, what was an economist subscription for a year or a time subscription? It was 157 pounds, 43 or something. The ability to get-

Will Page: Yeah.

Richard Kramer: ... an easy on ramp exposure to a range of content. Other than getting free content on via Google, it doesn't exist. There's no place to say, I wanna be well informed. I want to get a wide range of news sources. Can I just pay one low price and see everything aggregated for me? Now, I guess my question is how does the news industry jump the shark to go from appealing to a low single digit number of millions of users for the top titles in the world to appealing to and reaching hundreds of millions of potential users even at much lower unit economics?

James: Yeah, okay. So it's a very good question. Quite a complex complex question, but I think the, to use one of Will's phrase is addressable market. I think the addressable market for news is smaller than music to start with. So I suspect that your, your total central market is a lot smaller and you mustn't compare therefore. Success doesn't look the same as it does in music. Music is pretty universal. News is not, there are some people, there have always been some people who just don't, are not interested. I think the answer is not so much in the content but in the organization and the business model. The answer to that really is about the type of content that you're providing.

So if you look at what the New York Times is doing, the New York Times is basically saying, "We're gonna have a whole bunch of subscribers who are with us because of news. We're gonna have a whole bunch of subscribers, not an insignificant number who are with us because of puzzles. We're gonna have a whole bunch of subscribers who are with us because of food. We're gonna have a whole bunch who are with us because of-

Richard Kramer: Sports.

James: ... uh, tech, they've just bought the athletic." So for them, what they're basically doing is they're becoming whisper, they're becoming a magazine company. They're basically becoming a company that has five or six verticals around which they're trying to build subscription businesses now. They are not the best example because they have the only ones who've really smashed through the ceiling and made their digital subscription really work. There's a few others who are nearly there but not quite, but their model might be the one to follow. But I go back to what I said earlier, it's not a zero sum game, it's not you have to be successful in digital subscriptions or you're out of the business.

There are plenty of companies out there who will feel that, "You know what if I build 100 million free audience and just use it to sell them stuff? That's good, that's a good business model as well." Future plc, who are the best media company you've never heard of, multi-billion pound revenue company. Very successful growth story. Incredible growth story over the last 10 years under the leadership of Zillah Byng-Thorne, as third of their revenue comes from eCommerce and that's basically affiliate revenue.

Richard Kramer: Yep.

James: They are building enormous international audiences around a brand like tech radar in countries where they have no physical presence and the entirety of that revenue is coming off affiliate eCommerce revenue. So this is not a one size fits all solution for news and mags. It is about having four lots or five lots of 20% and just working out what each of those five lots of 20% are. So then, so on that basis you don't need to be a Spotify. But just to finish this point, the reason that's important is you cannot do that if your data, your individual first party data is wrapped up in an aggregator who won't give you access to it. That's the problem with Apple. That's the big problem with Apple. While they won't give you the consumer data, it is of reduced value to you as a publisher.

Richard Kramer: Yep. Well it's fascinating because that so flies in the face of the received wisdom of consultants, which is just do one thing really well and instead you're saying it's essential to have a very diversified set of revenue streams 'cause you can't hang your hat on any one business model.

James: Richard doesn't send McKinsey Christmas cards.

Richard Kramer: No, definitely not.

Will Page: Well, neither you mentioned, well you mentioned McKinsey in, in your last podcast and that's a good, that's a good example. The good thing about the news industry is we can't really afford McKinsey so we don't have to listen to-

Richard Kramer: Yeah. And they-

James: [laughs].

Will Page: ... listen to what they say.

Richard Kramer: ... can give you all the bad advice and then reverse it three years later.

Will Page: [laughs].

James: So, you said that not me. [laughs].

Richard Kramer: Yeah, I've seen it many times. Let us get to our, one of our favorite parts of Bubble Trouble, which is our smoke signals. We ask you to do a little smoking with us and give us a couple of examples of things that maybe the likes of a Will page might have naively suggested about an industry you know really well where you go, "That's just not the way it is." The kind of things that you say, "Okay, when I see that happening, I know there's a fundamental error of perception or thought or understanding of an industry that I'd like to correct."

James: Okay. I think for our industry, I guess the smoke signal is the one that you mentioned, Richard, which is being careful not to become a jack of all trades and master of none. We have been very successful at doing one thing well for 100 years, which is creating really great content, award-winning content that changes the world. The number of instances of content from news and magazine industry that has changed the world. I lose count it.

Will Page: Fair point, fair point.

James: And monetizing it through fundamentally one and a half business models, advertising and a bit of circulation. When you change that industry, when you change the dynamics of that industry to becoming an industry where it does four or five things and try to do all of them well, is that difficult? And how I would manifest that and the real smoke signal for our industry is identity, self identity.

The problem in our industry at the moment is we do not have a collective term of self-identification. We've talked in this podcast and in your previous podcast about news, mags, journalism, entertainment, lifestyle, blah, blah,blah, blah, blah. I have a board of 30 companies in this space who direct our work. If I go round that board and ask each of them what their company does, 20 years ago they would've said they were magazine companies. Now they will all give me a different answer. They're all different companies doing different things. So I think there's a real problem when you have an industry that cannot collectively self-identify because then you do not know where as a group, as a tribe you are going.

Will Page: Wow.

James: Second smoke signal would be, and you touched on it in your, in the last podcast, and this definitely is a right over reply thing, is investigative journalism. Investigative journalism is a public good. It is a public service. It provides a valuable function to society. There is real doubt and debate at the moment about how that is going to be funded because increasingly the journalists that do this are becoming freelance. And when they're freelance their subject to the risk of legal action from the people they're investigating and they have nobody to back them up. Carole Cadwalladr, who everybody knows, speaks very eloquently about this and would be a good person to talk to about this, but she's absolutely correct in saying that if we want to preserve the public good that is investigative journalism, we need to find a collective mechanism to fund it, a society led mechanism to fund it.

Richard Kramer: Indeed. And even in, in markets like uh, the Philippines or Mexico, you need actually armed bodyguards because these journalists are clearly under material threat for exposing the corruption or malfeasance that they-

James: Yeah, somebody like Maria Ressa who you know runs Rappler Nobel Prize, obviously faces constant stream of threat to her-

Richard Kramer: Yeah.

James: ... business and to her personal existence just from the legitimate work she does in, in, in that. Interesting as well, she does a very interesting presentation about where a lot of that threat comes from. Some of it comes from her domestic market, a lot of it is funded but and is coming directly from sources in Russia, which they can trace.

Richard Kramer: Indeed, Russia has a, has unfortunately a sterling track record of both arresting and murdering journalists, which most recently the last independent site struggling on in Russia had its editor-in-chief arrested.

James: Yeah, that's right. We uh, we recently interviewed Alexi, I've forgotten his last name for, Phil, not something like that.

Richard Kramer: Yeah.

James: Who is, uh, independent radio journalist whose radio station was shut down in Russia. And one of the things we've been very careful to do in the Ukraine Russia conflict is not only focus on how we support Ukrainian media, but also support Russian journalists who are trying to tell the truth and were trying to hold their government to account of which there are a great many, uh, operating in very difficult circumstances at the moment. So it, it is a very difficult situation there.

And my third final smoke screen would be print, dear old print that everybody loves. Everybody seems to love print, everybody loves magazines and newspapers. The smoke screen, the smoke signal rather is how are we going to pay for that in the future because that seems to be a quality product in search of a business model. There are some suggestions that the business model there might come in the form of turning it into a luxury product, making it better production value, reducing the frequency, increasing the price. But I don't think it is quite cracked that yet.

Richard Kramer: Well it clearly there's some of that in the, in if you look at a Vogue magazine for example.

James: Yeah.

Richard Kramer: That's a luxury good-

James: That's right.

Richard Kramer: ... that is incredibly profitable. The folks at the FT tell me that 30 or 40% of their advertising is bought at the start of the year by luxury goods companies to fill how to spend a magazine. And I love my print version of Saturday FT because I enjoy reading it over the morning coffee. But that's a ritual that the next generation coming through may not share with our generation.

James: That's, that's right. And there's two kind of follow ups. That first one is whisper it, but the whole industry magazines and most newspapers still make most of their money from print, certainly still make most of their profit from print.

Richard Kramer: Hmm.

James: So this is not a dead industry at all. The second one is pricing, which we went all the way to the podcast without talking about because I was prepared to concede Will's point that we're not very good at pricing [laughs]. So I'll just say that. Yes, will you had a point there.

Will Page: [laughs].

James: And the reason the pricing is the way is in our industry, I think it's because what we're doing is carrying over the habits that we built up in print where we were pretty good at pricing and we're trying to apply them in digital and obviously that's not working.

Will Page: Before Richard closes out, let me just quickly add on the luxury point. And, and looking at the half year results in the US and UK music industries, the fastest growing line item today is vinyl.

James: Hmm.

Will Page: And the latest metrics I've seen is that 55% of vinyl buyers don't actually own a record player. So they're buying merchandise.

James: Yeah.

Will Page: That's interesting that we have this huge revenue stream, which isn't even being consumed, but it's a luxury product, Harry Styles.

James: Well we've had this, we've had this revenue model in magazines for decades. They're called coffee table mags for a reason. Coffee table mags live on the coffee table. They are red, but they're not red by, as much as we would like to think. They are there to show people that you are a part of that brand, and that performs a valuable function in its own right.

Will Page: I heard vinyl is being driven up by the fact that you can't roll up a split on an MP3 file, but you can on a vinyl record, so.

James: [laughs].

Will Page: As you're discussing smoke signals, I thought I'd throw that one in there.

James: Yeah.

Will Page: Richard, do you wanna take us to the close?

Richard Kramer: Sure. I'd like to thank James for a fascinating conversation, a right to reply. I think there's plenty of issues to pick up on, further on how maybe the newspaper industry, the publishing industry broadly can learn a little bit about pricing from some of the digital players. And indeed we didn't touch on the rather contentious issue of how to ever get sensible regulation into the big tech arena that has inter, disintermediated all the premium publishers around the world and maybe inserting itself further as algorithms selecting and editing what we all see in here. With that, thanks a lot James. Thanks Will for incisive questions and we'll see you all next week on Bubble Trouble.

If you're new to Bubble Trouble, we hope you'll follow the show wherever you listen to podcasts. Bubble Trouble is produced by Eric Newsome, Jesse Baker and Julia Natt at Magnificent Noise. You can learn more @bubbletroublepodcast.com. Will Page and I will see you next time.