The Atlantic is going to launch a paid content offering soon

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Session Title: How to Monetise Digital Content: Advertising or Paywall?


Mathew Ingram
Justin Smith
Raju Narisetti
Richard (Dick) Tofel
Bob Bowman

Announcer 00:02
Talks about. He’s going to be talking about How to Monetise Digital Content: Advertising or Paywalls. Mathew Ingram coming back to the stage. He’s going to be speaking with Bob Bowman, President and CEO of MLB Advance Media. Raju Narisetti, SVP and Deputy Head of Strategy, News Corp. Justin Smith, President of Atlantic Media and Dick Tofel, President of ProPublica. Please welcome our paywaller advertising panel.
Mathew 00:33
Look it’s me again. Everybody find room. Good. All right, well I know we’re not going to have a huge amount of time for all four of you, so I want to jump right into it. So Justin, if you don’t mind, just as you take a sip, I wanted to start with you. I know, obviously, there’s sort of a huge sort rush towards paywalls, everyones putting them up. Everybody and their aunt has a paywall. Washington Post said it wasn’t going to, now it has one. The Atlantic has remained steadfastly dedicated to advertising as the model, not giving up and sort of– and I’m putting that loosely. Can you talk about why you see that as being better than a paywall or are you thinking paywall along with everyone else?
Justin Smith 01:25
Sure. Delighted to be here, thanks for having me. I think, the first point is the Atlantic actually does not rely solely on advertising. Because we view event sponsorship is pretty much a diverse revenue stream from advertising.
Mathew 01:38
Justin Smith 01:39
And we have double digit percentages of events revenue as a percentage of total revenue. Total of advertising sponsored revenue. So that’s a very, very kind of different and diverse thing. I think my view – this is my view, we don’t have an institutional view, there’s a lot of individuals at Atlantic, Atlantic Media Company, that are trying to do this together and figure it out – is that the soul of this notion that this is the year of the paywall, the paywall is coming has been a little bit over hyped in the marketplace. I think you see moderate paywall success in certain very specialized areas and sort of core kind of obsession based enthusiast areas, and professional B2B areas, and in a few kind of outlier brands like the New York Times that are sort of the newspaper of record that do great. But beyond that it’s not a what I would call a wave of success that everyone is waking up to and saying. It’s a pretty mixed record and I would actually contrast it slightly to more as a way of success that I think there probably are dozens if not hundreds of smaller niche ad supported free content models that actually are profitable and are doing well and that’s been the story for the last couple of years.
Mathew 02:50
Like what?
Justin Smith 02:52
Well I mean I think like Breaking Media, the company that I’m an investor in which owns and and, these niche Wall Street fashion– They’re doing 35, 40% margins on advertising alone. Again high CPM, CPM depreciation, in those niche markets is not dramatic, so… The point is that the word we think about the most when we think about our future is humility. We just don’t really believe that we know where everything is going. We don’t want to pretend we know where everything is going.
Mathew 03:26
That’s not a word the media is usually associated with.
Justin Smith 03:28
And I think to say that the ad model is going to win over the pay model is foolish. I think the solution will be multiple revenue streams, it will be how experimental, how creative you are in seeking out those revenue streams, and I will say that actually the Atlantic is about to announce a paid content product in the next two, three weeks. Which is actually–
Mathew 03:57
There you go.
Justin Smith 03:58
That’s our answer, but it’s again–
Mathew 04:00
You just announced it right now [chuckles].
Justin Smith 04:01
[chuckles] I did, and Scott Haven is in the room, so I don’t want to steal his thunder.
Mathew 04:05
Whoops [chuckles].
Justin Smith 04:07
[chuckles] Anyway, but–
Mathew 04:08
What is it?
Justin Smith 04:08
–humility– We’ll talk about it in a couple of weeks, but it’s again the reason we’re doing it is we absolutely believe that paid content is an important part of any long term sustainable market. Particularly for the type of journalism that we do, which our foundation is really high quality journalism. Where we believe in that great tradition and legacy that the Atlantic has had for over 55 years.
Mathew 04:35
But this is going to be something separate, not a wall around existing content.
Justin Smith 04:37
It’s going to be the paid product coming out of the Atlantic brand.
Mathew 04:44
Justin Smith 04:44
So, but we’re not putting all our–
Mathew 04:46
We’re continuing trying to nail you down [chuckles].
Justin Smith 04:48
We’re not putting all our eggs on pay, we’re not putting all our eggs on advertising, we’re not putting all our eggs on events. I think we’re just–
Mathew 04:53
You’re willing to try everything.
Justin Smith 04:54
Not willing, we must try everything. And we must not believe that one thing is going to work over the other until we actually experience it and see it over a period of time. Especially if you’re going to invest in the type of journalism we’re investing in, because we are hiring fantastic journalist, expert journalist, and it’s a more costly cost structure then a lot of other new media entrants.
Mathew 05:20
So Raju, I wanted to come to you next. News Corp obviously, to a lot of people is sort of a big believer in paywalls, is that the only model that News Corp sees going forward or are you willing to experiment as well?
Raju Narisetti 05:33
I think News Corp has experimented in the sense that there’s a whole range of options. I like to compare it to wearing a button down shirt and a tie which is our Times of London, which is a hard kind of paywall. You don’t get anything if you don’t pay.
Mathew 05:48
Raju Narisetti 05:49
To the Wall Street Journal where 120 hours of video a month is free outside the subscription site to market all things [inaudible] which are wearing your loafers and jeans kind of a dress up. So, the range of pay of options has always existed. We have been associated with pay models partly because the Journal has been paid since day one, 15, 16 years ago. So that’s the reason why I think people think of News Corp as in the pay camp, but–
Mathew 06:18
And the Times I guess, I mean that’s the hardest of hard paywalls.
Raju Narisetti 06:21
Right, and the Times is having a lot of faith in our journalism to say that we think we produce an amazing legal product and you pay for it and you get it.
Mathew 06:32
But isn’t one of the risk with a hard paywall like the Times that it’s a great way to monetise your existing readers, but it’s not a great way of finding new readers. How do you, with a totally hard paywall, how does anyone suddenly decide, Oh, I’d like to go and pay for the Times now?
Raju Narisetti 06:46
It is a challenge. I think there are ways to tactfully allow people kind of access to stories that you want them to see. The Journal particularly does open houses once and awhile–
Mathew 06:57
Raju Narisetti 06:57
–kind of expose a lot of content.
Mathew 06:59
Does that work.
Raju Narisetti 07:00
It does, they have been doing it fairly successfully. It works both ways. It works for readers and also advertisers are very interested in sponsoring an open house. So I think it double monetisation opportunities actually.
Mathew 07:13
Dick, I wanted to go to you next. ProPublica, you and I talked a little bit about this the other night, is ProPublica a unicorn? I mean you have a model where you got money from someone, but you don’t have to charge your readers, and you don’t have to rely on advertising, is that something that other people can do or is that something that only one or two entities like ProPublica can do?
Richard 07:36
No, I think it’s– We were talking and I said your question, I thought was, ” Was it a concept car or a prototype”.
Mathew 07:45
Richard 07:45
And I think it’s much more nearly a prototype. Now that doesn’t mean that automobile prototypes are easy to construct and neither are news prototypes. I think that non-profit press is essential in certain areas of content, where the for profit press, with just a very few exceptions, is in very significant retreat. Investigative reporting, which we do, international reporting, state house reporting. I think you can just lay out in this country how there isn’t going to be significant resources thrown into that by all but by a very, very few players from the for profit media. So the non-profit media needs to step up and is stepping up around the country. Now I think when you boil down what Justin and Raju were saying, there are fairly high bars for paywalls in terms of content and quality. There are equally high bars in terms of content quality for attracting non-profit funding. It’s by no means one person, we got our founding founder last year down to 39%, and it will well below that this year. We had 2300 donors last year, 100 of them at quite significant levels and we’ll have, I think, more than that in the aggregant more numbers than that this year. But there is the same challenge every single day to prove what you do to attract that kind of [inaudible].
Mathew 09:19
And obviously you’re not totally unique. I mean we talked about the Texas Tribune, the same similar model in Texas. But is every state going to have a Texas Tribune or a ProPublica, is every major city going to have their own non-profit–
Richard 09:31
I think eventually they are going to have– look, every major city in this country has a symphony, has a ballet, and every one has an art museum, and every one has a theatre–
Mathew 09:41
Lots of them aren’t doing that well.
Richard 09:42
What? [chuckles] Lots of things aren’t doing well, and in bad times they do less well than in good times. But we tend to have a robust set of cultural institutions and I think it is clear with the way the press has evolved in the last 10 years or so that there are going to be some non-profit press institutions that are going to join the ranks of cultural institutions and I think that ultimately is what we’re building. There was an FCC staff report last year that noted that if we directed 1% of all the philanthropy in this country to non-profit media, it would amount to enough to pay for all of the public television stations and programs in this country, all of the public radio stations and programs in this country, and 100 non-profit news organizations the size of ProPublica.
Mathew 10:39
Well that’s–
Richard 10:39
Mathew 10:40
We just have to do that then.
Richard 10:42
Well I think we’re moving in that direction.
Mathew 10:44
Okay [chuckles]. Bob, I know some people may have looked at the program and thought one of these things is not like the other, we’ve got three–
Bob Bowman 10:51
You think that’s me or you?

Mathew 10:55
Let’s leave that one for now, but you know major league baseball I think a lot of people probably may not appreciate how much of media company it is, and how early MLB was in terms of using different methods, different tools, ways of reaching it’s audience, something obviously media companies are trying to do too. So I wanted to hear from you any lessons that you’ve learned from what MLBs done that you could sort of share with media companies about how to do that.
Bob Bowman 11:26
Our view is that you need to do both, as Justin stepped on his lead, but in the end they’re going to launch a paid content product. Any publication out there should have a paid content product.
Mathew 11:36
Bob Bowman 11:37
Everyone, anyone. Everyone has a die-hard customer fan, whatever you will, that wants the ultimate product and is willing to pay for it. How you price it, what it looks like, as Justin touched on, what their product is ultimately going to be is going to be different than what they do now–
Mathew 11:52
Dick you don’t have a paid product?
Richard 11:53
We don’t, but– well we can get back to that.
Bob Bowman 11:56
And I just think that everyone should just because there are customers who are willing to pay, even if they are just supporting in the public interest.
Mathew 12:02
And you should let them pay?
Bob Bowman 12:03
And you should let them pay if they want to get– if they want to say, I got this, and turn their badge around, I’m a member , I’m this, I’m that, who are you to say, We don’t want you, we don’t want your money. Also I think, 95% of our contents free, you’ve got to have free content. Everything can’t be what you call hard paywall. We compete against 50, 000 digital media companies for the Yankees alone – for the Yankees content alone. So there’s a lot of competition out there, you’ve got to have free. But unless you’ve got paid content, unless you create a product that is the penultimate, and maybe some of them in our view just because of the brand and we like to think that’s ours too, not only will you lose out on customers, but you lose out on B2B opportunities.
Bob Bowman 12:42
The Wall Street Journals done a phenomenal job, in my view, from day one on sort of trying to syphon and put their customers in different strata, and then they have a free weekend. And they get it sponsored. The reason they get it sponsored is because it’s a paid content. And now the sponsors who want to sponsor, it’s been paid. The amount of people who want to pay more for that and higher CPMs because this is a real value, because its normally pay and now it’s going to be free, you’ve greatly expanded. So whether it’s paid content on a B2C or whether you’ve paid content because you’re going to make it free, free weekend or free this, which is a B2B paid content, in our mind everyone, every client, every media company has somebody who will pay for it. In our view.
Bob Bowman 13:20
But the main stay is as supportive, but in the end as a race, unless you have special content, that’s a race for who will sell similar content at the cheapest. And in sports we’ve got a lot of people doing a lot of low CPMs. So the reason we pursued everything, it’s sort of what Justin said, it’s–
Mathew 13:39
We don’t know.
Bob Bowman 13:40
–it’s not just humility, it’s sheer stupidity. We just don’t know what’s going to work and even 13 years in, we’re not sure. Everythings working a little bit, and some things work better now than they did before, but we think you need–
Mathew 13:54
But that could change.
Bob Bowman 13:54
–both. You’ve got to have both feet on the side of the river.
Mathew 13:57
Raju, you did a presentation, I’m trying to remember when it was now, about a concept called the reverse paywall.
Raju Narisetti 14:05
Mathew 14:06
Yeah, NewsFoo. I thought that was fascinating way of sort of turning the idea of a paywall around into not sort of hitting your loyal users with something, but offering them something. Can you talk a bit more about that idea, and why you thought that was–?
Raju Narisetti 14:21
I mean it’s a very simple idea, at it’s heart, which is saying that you have a wall or a meter that gets you to 10 stories and then you have to pay goes against human psyche, because you say, The more you consume us, the closer you get to paying.
Mathew 14:37
The more loyal you are, the more we–
Raju Narisetti 14:38
So there’s lots of other ways to monetise your audience getting there information, getting them to click on ads, getting them to fill out surveys, so the idea is, is there a way to give them points, if you will, by engagement. And the more you do with us, the farther you actually get from actually paying us. The challenge there is that you do have to have a paid model in place in the first place, to have a billing system.
Mathew 15:04
Is anybody doing that?
Raju Narisetti 15:05
Not yet, I think there is a mad, mad rush to embrace the New York Times metered model. Which is fair enough, because they’ve tested it and in two years they’ve gone from zero to 100 million.
Mathew 15:17
But there’s also the problem that not everyone can be the New York Times.
Raju Narisetti 15:19
Absolutely, and the more big papers put up paywalls, the better it is for the New York Times, because the Times can sell their Sunday paper in every market and say, Get our Sunday paper and digital access is free. And people will forget the Times did lose a lot of pageviews and and a lot of uniques, but they could afford to do that because they were number one and ad sell through rates are not so great. So most the papers would have to think pretty hard how much they are willing to give up by putting up a metered wall.
Mathew 15:48
But why is nobody trying that idea that you just described?
Bob Bowman 15:51
Because advertisers don’t want those people.
Mathew 15:53
Why don’t they want them?
Bob Bowman 15:54
Because they’re professional freeloaders.

Bob Bowman 15:59
They’ve stopped writing their blogs so they can go click on 10 ads. I mean that’s the problem.
Raju Narisetti 16:03
Justin, I mean it’s your phrase or not a good–
Justin Smith 16:06
You’re saying advertisers have a distinct preference over paid audiences as free audiences?
Bob Bowman 16:11
Mathew 16:11
Is that true?
Bob Bowman 16:12
Mathew 16:13
I’m not convinced that’s–


Bob Bowman 16:15
Somebody who has paid $130 for a product, you don’t think and advertiser would rather talk to that person then somebody who’s been–
Mathew 16:22
But how much would they rather talk to them?
Bob Bowman 16:24
Significantly more.
Mathew 16:25
Bob Bowman 16:26
Absolutely, this person has proven he or she has money.
Mathew 16:28
Go head Justin.
Justin Smith 16:29
I mean, this is a debate that goes back like 30, 40 years between controls circulation and [inaudible] circulation. So I use to work for the Economist and we use to talk about the $100 subscription, but then I’ve also been associated with control, back in the old days, with control models where is you actually can prove the reader is the reader, there’s engagement, there’s quality content, the advertisers don’t really care that much. And that comes from having gone on whatever, 10, 000 sales calls in my life, sadly. It depends on how you market it. It depends on how you present it, but I think advertisers will look for engagement, they’ll look for quality content, quality environments. And I think the paid argument is sort of an icing on the cake that somebody–
Richard 17:20
But in many cases–
Bob Bowman 17:21
But we’re not talking about engagement, we’re talking about rewarding engagement. Talking about devising a system that rewards engagement openly and extensively. That’s different then just rewarding.
Justin Smith 17:30
Yeah but what if–
Richard 17:30
But in many cases advertisers are–
Justin Smith 17:31
–the free side has higher engagement metrics then a paid side? I mean that’s–
Bob Bowman 17:34
No, no, I’m saying a different – I’m trying to make a different point. You create a scheme where you say, If you do this, we’re going to reward you more, rather than just creating an engaging site. Creating an engaging site, I’m with you, but trying to say, Here’s your new plan. If you click on 10 ads, you get three free stories. That’s what I’m saying, I think advertisers see through that in a minute. But an engaging site, Here’s our numbers. On our free site this is what people engage, yeah sure, they’ll pay for that.
Mathew 17:59
So you don’t see the sort of–
Raju Narisetti 18:01
Well I think advertising–
Mathew 18:02
–engaging reward you would think, you don’t see–
Raju Narisetti 18:04
I think advertisers pay for who you are, and your purchasing power. And the more information as a publisher that I have, then the more rewarding it is.
Mathew 18:14
Because it seems like what advertisers are looking for is targeting.
Raju Narisetti 18:16
Mathew 18:17
They want specific readers. They don’t just want someone who paid, they want someone in a specific category, with specific interest. So if you can give them that, whether they paid or not is almost irrelevant.
Bob Bowman 18:27
I don’t agree. I think whether or not people have money is relevant to an advertiser.
Mathew 18:32
Well sure they want to know if they have money, but whether they paid for that specific thing, that content, if you can give them the targeting they want around–
Bob Bowman 18:40
Okay, so now you want– you would say the CPM on our paid content should be comparable since it’s the same fan, comparable to the free. And yet it’s four to one.
Mathew 18:51
Four to one, yep.
Richard 18:53
But all these things– I’m not in the business anymore, but I was. But all these things are proxies for other things. What you said Mat is exactly right. Advertisers want to pay for particular readers, who you are aggregating, and the science of this, well it’s a heck of alot better than it use to be, is still extraordinarily imperfect. So they use a lot of proxies. As the data gets better, the proxies will become less and less important, because they will know more and more about who you actually have.
Mathew 19:29
So whether you paid or not might become less important?
Richard 19:32
Right, and– yes, that’s correct. And then there are, as you know in the ad business like in any business, there are fashions. And a bunch of these proxies are also fashions.
Raju Narisetti 19:42
At the end of the day, my newsrooms spend as much time trying to engage and bring audiences back as would a free site. Just because somebody has paid doesn’t mean they’re coming to spend all their time. So in that sense, the effort you put into bringing your readers and engaging them, as Justin says, is actually much more than if they are necessarily a paid subscriber or a free subscriber.
Mathew 20:05
But it almost takes more effort because the tendency is to think, Oh well, they’re paying so who cares. They’ll come back because they’re paying.
Raju Narisetti 20:13
And the reality is they don’t.
Bob Bowman 20:14
No, you have to–
Justin Smith 20:17
The product has–
Bob Bowman 20:17
You have to earn– it’s like owning a stock, everyday you don’t see it, you bought it.
Mathew 20:20
That’s not something newspapers or rather media entities are particularly good at.
Justin Smith 20:24
So when was the last time–
Mathew 20:26
Kind of promotional–
Bob Bowman 20:26
They can cancel at a moment’s notice.
Mathew 20:28
Wait, people subscribe, you deliver their paper, checks roll in. Go on.
Raju Narisetti 20:32
Yeah, but that’s a very sweeping generalization as to what happens in newsrooms these days, whether it’s a newspaper or digital only. Newsroom I think a lot of energy is going into deciding what drives engagement and loyalty and repeat audiences. And a lot of data is being shared to kind of help newsrooms do that. Some do it better than the others. The Guardian is a good example of constantly trying to kind of be ready when bringing people back and others do less so.
Bob Bowman 20:57
The frequency though. I mean, if we’re going to sell an ad, and you come to our site once a month versus you come 30 times, the likely we’ve seen the ad is zero in the former and so frequency – reach matters, frequency matters too. Whether it’s free or paid, I think we all work very hard on our content. But paid, they can cancel and you lose that revenue stream and for our content, they can cancel on a moment’s notice. If our content isn’t good– what we think is good, we have turn and I’m sure the journalists turn and everybody is turning, nobody wants it, and so you work very hard to retain them. Both you want the free content to be good too, but you don’t– paid Content is not, they’re going to come back just because they paid for it. They’re going to come back if it’s really worthwhile and you respect their time.
Justin Smith 21:41
But there is also a dynamic-– I’ll let you lead the conversation again, but it’s dynamic where much of the reason why all these paid content models are facing so much pressure is that consumers have voted with their click that actually alternative free sources in many instances that maybe at a different quality standard or may not; it’s in the eye of the consumer or actually good replacement product. That actually that replace – how many people turn their nose up with the Huffington Post thinking this was just some sort of flashing kind of tablodie thing, when next thing you know it’s a larger audience then the New York Times.
Mathew 22:18
And the competition that matters is not the one that [inaudible].
Justin Smith 22:19
If you could be mogul for a day, would you – if we took out the influence and if you had a financial bet on owning the future with Huffington Post versus the New York Times, what would you do? So I think there is a great deal of– I think there’s a great deal of risk that we see in traditional media kind of holding up certain of their own historical standards of what consumers want and then watching consumers basically leave them because they weren’t paying close enough attention.
Raju Narisetti 22:54
It’s more courageous to do a paywall than keep it free, because you’re putting a lot of faith in your product, you’re putting a lot of faith in your brand and your marketing and your ability to continue to charge for it. So to say that free is more courageous or models that are all free are somehow more innovative, I don’t think is the reality of our media business.
Mathew 23:15
But some people are going to try that courage is move and fail.
Raju Narisetti 23:18
Mathew 23:19
Their paywalls are not going to work.
Raju Narisetti 23:20
Right. I mean the newspaper – [inaudible] fairly strong critic of paywalls. The newspaper industry is beaten up for not doing anything. In the last year and a half, 600 publishers have courageously taken the step to start paywalls. Whether they work or not is a question mark, but at least they should be applauded for trying.
Mathew 23:42
Courageous isn’t the word I would use for lots of those paywall. That’s not the word I would use.
Richard 23:46
I agree. I’m not sure it’s a certain amount of it is desperation and truth is right that, that some of them are going to make a lot of sense because the content is going to justify it and some of them are not. I mean you get so deep inside this problem, you miss the basic value proposition, which is when you ask people to give you value for something, you’ve got to deliver value in return. And if you’ve spent 15 years degrading the value of your product and you turn to them and ask for value, you may get disappointed.
Mathew 24:14
We’re running out of time. I wanted to ask you – you mentioned risk, one risk whenever I talk about the Atlantic as a potential model as people bring up sponsored content and they say, Well, if you don’t have a paywall, you have to do things like run articles for scientology that are going to drive people away. If sponsored content is one of the ways in which advertising works now, how do you manage that and what have you learned about managing that.
Justin Smith 24:42
Well, I mean the scientology kind of add in Broglio was just flat out kind of mistake. It was an execution mistake and we were kind of moving too quickly, we didn’t have guidelines and procedures in place. There is a lot of new staff, as we’re actually growing. So it was actually just a kind of a mistake. We actually took down the piece in question within a couple of hours. We apologized within couple of hours. We really took – we owned up to this mistake and we’ve tried to turn it really into a–
Mathew 25:18
But that doesn’t mean the model is bad. That doesn’t mean–
Raju Narisetti 25:19
Well, I’ll get to it in a second. We’ve owned up and try to turn it into a positive for us which is to devise guidelines for sponsored content that were developed with both our editors and our publishing staff together, our company pulling together really looking at this objectively and saying, “What are the standards here that we should be setting.” I think we’re amongst the first in the media industry to actually create/release serious thoughtful guidelines and what sponsored content looks like. So our lesson there was actually to not make mistakes like that because you’re moving too quickly and you don’t have guidelines in place.
Mathew 26:02
But you don’t see it is being flawed.
Raju Narisetti 26:03
No, actually I think sponsored content – I often times give the example like – if you look at back in the 1960s and 70s, Exxon Mobil used to have this ad on the op-ed page every day and it was actually an op-ed piece on the New York Time op-ed page every day in a little corner, and it looked like an op-ed and it said sponsored by Exxon Mobil and it was–
Mathew 26:27
Or just Mobil.
Justin Smith 26:28
Yeah, it was Mobil. It was native to the op-ed page. It was – your eyes would go–
Mathew 26:34
Fishy [laughter].
Raju Narisetti 26:36
It sounded fishy, well there wasn’t – there may have been some discussion about at that time, but I don’t really necessarily see that these models that were looking at sponsored content assuming that they do not betray reader trust and that–
Mathew 26:51
Because Andrew Sullivan who I think used–
Richard 26:54
There is a rather important difference. New York Times did not write that piece for Mobil. Herb Smertzer was the VP–
Mathew 27:00
Well the Atlantic didn’t write the scientology piece, did they?
Richard 27:04
But the New York Times wasn’t vouching for it at all. On the days when the Mobile ad wasn’t on the–
Mathew 27:08
They put it on their op-ed page.
Richard 27:08
It was somebody else’s ad.
Justin Smith 27:09
So the distinction you’d say is that some businesses in fact–
Richard 27:12
What is sponsored content? You tell me how sponsored content differs from an ad?
Justin Smith 27:17
I think there’s a panel on sponsored content.
Mathew 27:20
They’re sure is.

Mathew 27:21
And actually I’m sure Andrew Sullivan will get into it too, because he believes it’s fundamentally unethical.
Justin Smith 27:26
But I think you’ve to ask that question that have advertorials been unethical and other mediums forever. Because commercial stats of the New York Times, I can’t make this [inaudible] but commercial stats of large established media organizations with great editorial integrity have produced advertorials for advertisers for 100 years.
Richard 27:45
You have to–
Justin Smith 27:47
So you ask me with a great deal of seriousness, “Well, does your commercial staff produce advertising content for advertorials? That’s so different.” But you’re nodding your head now and saying that’s not different. So that’s I think captures this debate. There’s sort of like this disconnect like, “Has it been going on for 100 years like this, has it not been going on–”
Richard 28:05
Well it definitely has been going on. I just don’t think– I’m not sure the Mobil thing is the right example. FT Advertorials which when I was at the journal were a serious part of our ability to compete with them is a very important part of their business model particularly before they first came to the US. Sure, I mean it was a big part of how they floated the boat.
Raju Narisetti 28:25
And much of the–
Richard 28:27
And readers understood it very clearly.
Raju Narisetti 28:28
Much of this argument also takes out readers to be idiots. If there’s clear labeling and there’s a clear distinction between your content and sponsored content and it’s presented that way, I don’t think there’s anything wrong with it.
Justin Smith 28:40
Yeah, [inaudible] says. I mean there was actually zero question–
Mathew 28:42
You edited [inaudible]
Justin Smith 28:44
From a labeling point of view. Yes, there was a series of major mistakes which we’ve acknowledged apart is for, but disclosure of the advertising relationship or the content was actually not essential critic. So can I actually just make one point moving us away–
Mathew 29:03
We’re just quickly out of time, so-
Justin Smith 29:04
Which is I think – this has not been said, which I always the question, where are the startups with paid models. You can show me that like the hot new startups that are like starting paid models and what I see out there is the most of the paid model conversations are coming from organizations actually come of the legacy.
Mathew 29:25
Andrew Sullivan has a paid model.
Justin Smith 29:27
Well, that’s true. I think he is one of the few I would say in this particular space. But there is what a lot of new medias doing is that they’re sort of disrupting and Henry Blodge has got a great slide on this. They’re disrupting the cost structure of traditional media and basically the savings are getting on cost, they’re losing in subscription revenue. But therefore it’s transiting through to a sort of a profitable margin, and I think not enough people talk about that. The cost disruption is at the heart of what’s going on and I think traditional media needs to think about disrupting their own cost structures pretty quickly while they’re also looking for paywalls, because–
Richard 30:04
And that’s – but that makes the point though. So that cost structure means, the Henry [inaudible] so take it away from him. But that startup can now live with the dollar cpm add.
Mathew 30:15
Richard 30:16
No, they do, not theoretical. Trust me.
Justin Smith 30:18
Little bit higher.
Mathew 30:20
Are they profitable?
Justin Smith 30:21
Pardon me.
Mathew 30:22
Are they profitable?
Justin Smith 30:22
Sure, if they have enough reach, they can charge a dollar cpm, $2 cpm, they can get away with that.
Mathew 30:27
So you can see them trying to catch up following [inaudible] cpms are not staying stable, they’re dropping.
Richard 30:30
That’s the point, and that’s why you’ve got – I think that is. I agree with everything you’re saying, but–
Mathew 30:34
Can we do another 20 minutes.
Richard 30:38
But that is the point, so that’s why we have to stratify it.
Mathew 30:38
Please wrap up.
Justin Smith 30:38
Ignore that, that’s actually enough for us. That’s for the panel before.
Bob Bowman 30:46
That’s why you’ve got to stratify your customers right, because you’re going to have to have it free but that is – you’re going to chase down to the lower CPM, because it is [inaudible] an absolutely difficult structure. But you still should I believe everyone could have some paid content because they’re going to be some people who will get the best content they’re getting.
Mathew 30:58
You got to [inaudible] now.
Justin Smith 31:00
Mathew 31:02
So, we’re going to have to wrap up. I’d love to hear your thoughts about sponsored content sometime.
Richard 31:04
Yeah, I’ve got a lot of thoughts – who knew that Mobil was running those—I was reading that those were the only [inaudible] New York Times [inaudible]
Mathew 31:12
[inaudible] our panel. We have some coming off now.