Transformation at The New York Times | Sebastian Tomich, The New York Times | OnBrand '17

[Music] thank you good afternoon everybody it's a pleasure to be here quick show of hands do I have any New York Times subscribers here it's actually better than I thought but I feel like I've got a lot of work to do how many New York Times readers not subscribers just for readers okay and then hands down since it became clear that Trump was gonna be elected US president how many you read the New York Times for the first time okay that's a good story so usually when I get up on stage of these conferences I'm here to sell you something I'm here to talk about some new capability or a new business that we launched today I thought we'd do something a little different and it's kind of the opening said I think there's a lot of drama right now around journalism and the business models that are gonna fund it and that drama circle a lot around the New York Times over the last few years you know I've been at the New York Times for four and a half years I'm incredibly passionate about the business incredibly passionate about the journalism and I want to make sure that journalism is here to stay so I'm gonna open with a question what happens when your business is threatened with oblivion not from this guy now I just have to say it's kind of amazing that the only surefire way I can get an audience to laugh is to show the US president it's a problem it's from this guy Michael Moritz he's a famous Silicon Valley investor he did a post on LinkedIn about five months before I started at the Times titled what the New York Times could have been and he was responding to this it's called the innovation report group in our newsroom very secretive group probably the most digitally savvy savvy editors in our newsroom got together over the course of the year and went to drill down on how we can set ourselves up for the future they spent close to a year and what came out of it was one major finding so the New York Times is winning at journalism but failing against primarily our digital first competitors at getting our journalism to digital audiences so what happens when you produce a highly high-quality very in detailed internal report is that internal report always gets leaked and something ironic about it is that the report was about how we're losing to digital first competitors at distribution and BuzzFeed was the first publisher to release it Moritz read this and in response did this post and the post talks about a lot of things but primarily the fact that the New York Times had been just successful enough over the last five years to basically just get by there was no threat no reason to change we had made just enough money to support our newsroom and his broader point was that digital first companies embraced this thing called the Jeopardy factor you know if that's BuzzFeed or that's vice or that's Fox or that's any startup in the world they walk the halls each day thinking the next day could be their last and legacy media companies don't live that way we think just because the quality of our journalism we will be a successful business and he pointed to what is now probably a funny example all of 2013 Facebook was in second place Twitter was about to go public the narrative was that Twitter would be the dominant social media platform for the mobile age and for those of you who remember Mark Zuckerberg famously locked the entire company down and said no one does a single piece of work unless it is mobile first we all know how that story ends now if you fast-forward to the new york times we've had a journey for the last five years we didn't necessarily agree with all of moretz's critique but we still invited him to our headquarters to come and talk to our executives and he talked about this fact that we need to embrace oblivion to change and the only way we're gonna change is to embrace that every single day and the things that we do and I'm gonna tell a success story but a lot of people ask how did you change a hundred and fifty year old organization that is rooted in a tradition that has really never changed and regardless of any product any new new capability any new capability it really all came down to this the fact that the possibility of your own death your own mortality clears the mind it allows you to change there I'm gonna take you through the newsroom take you through a subscription business when I'm a start and the business that I began my career in the ad business how many of you work in advertising here in this crowd so the ad business I would say is going through some of the craziest times it has ever gone through in its history I started my career at Forbes magazine in 2008 then even remember 2008 regardless of your career it's possibly the worst year to ever start a job in October 2008 the financial crisis hit I was very eager and young very excited to start my career in ad sales all of a sudden there was no ads to sell fast forward three years later I would say 30% of the magazines that were publishing out of New York were out of business probably 50% of the people that I knew working in media were know no longer had jobs if I look at our challenge for those of you who need glasses we need the blue to grow faster than the red it's pretty clear not so easy now going back to my times at Forbes I never would have thought that I would refer to those as the good old days but here we are today so I'm gonna walk you through how that's changed in the old world a newspaper a magazine company we'd have a team of salespeople and marketers they'd be sitting at their desks waiting for the fax machine or an email an advertiser would send them this RFP we're all waiting we think hey you've got a $500,000 budget I'm gonna take this box I'm gonna put it in this box and if we get really creative if you're a fashion advertiser I may put you in the fashion section big creative when the internet comes along oh my god the smaller little box I'm gonna put it in this box or maybe even an article page getting very adventurous the advertiser sends that ad we deliver that ad finance bills we repeat this is a very profitable business for media companies this is how we've survived for the last hundred and fifty years here we are today there is no RFP so if you're a newspaper your magazine you have a large team of sellers they're not doing anything if they're not outside of the building our new meeting so in the old world a marketer would come in we'd send a salesperson the salespersons boss the salespersons boss's boss maybe that boss's boss's boss's boss into a room we'd all shake hands pretend to be best friends try to charm the clients into buying something that has changed completely today when we bring a marketer into the building it is much more about solving a creative challenge in the moment it's no longer about sales it's about surrounding them with creatives technology and product folks to do a live brief with the client the client nine times out of ten is going to say I want something never been done before something only our two brands can do together and it needs to reach our audiences as efficient as Facebook and snapchat I wanted to have as much scale as TV I want to match my customer data with yours I want it to be so big I wanted to get pressed I want my boss to be on the cover of add age I want it to be nearly entirely video and oh by the way none of it can look like advertising this is the business we're in now and we call this the fall of advertising and the rise of programming the idea that every marketer that comes in the building wants to talk about how they can meet their customer where they are on their terms was something that they will actually enjoy so this started happening around 2014 I would call this the beginning of native advertising everybody is focused on how we improve the digital advertising experience we had a big call to make we've sold pages and the newspaper in our magazine and banners on a website again for our entire history banners for 10 years we had to change things up so the first big investment was our staff the company the media business broadly I would argue any single publisher around the world no matter if the New York Times or any publisher you have to become a creative business this is no longer about transacting and selling it's about coming up with ideas and being a creative engine other publishers paved the way to this I think vice is gonna speak at some point later today to me they are a perfect example of this model and we had to go through a wholesale staffing change internally to do this so we have doubled the amount of creatives on staff since this movement began we started a creative agency inside The Times which at the time our head of our newsroom had said literally gone out in public and said we will never do native advertising ever and then I started my job I think three months later with the goal of starting a native advertising division which was very tough we went out started an agency - which is now close to 200 people across four continents we're making VR films we're producing native advertising and branded content on our site we've acquired two ad agencies one a social influencer Network focused on Pinterest and Instagram and then second an experiential design company which focuses on that sentence I put earlier about I want to do something that has never been done before and only our two brands can do together this is why we acquired fake love we also just launched a consulting business focused on building brand newsrooms so how can we help brands build out their own newsrooms internally all of this just to show you that the business models have changed drastically and had legitimate success now if I go to 2015 we had the chance to basically say we launched these businesses we're going to win we think we've solved it we're gonna pay for journalism for eternity this is some of the work so Tiffany our largest print advertiser largest and oldest print advertiser they've been advertising us with us for close to a hundred years again we we used to sell pages in a newspaper we've now just finished a series of films for them on their relationship with the art industry and the Whitney all produced by our team in-house speaking of some of the kind of craziness of the work I call this the innovation bonanza Kia came in again in the old world saying hey I want to launch a new model called the cadenza and the old world would have sold him advertising in this case we rebuilt their car as an instrument built it from the ground up dropped it into a John Legend concert and then allowed social influencers to come and play songs on the car live on Facebook as we stream the concert for John Legend and then my favorite piece of work we've done today that just shows you this transition is our work with IBM and the movie hidden figures it's where any of you who have seen the movie a group of NASA scientists women and minorities who didn't get any recognition we set out to basically develop a program that would give them the recognition they deserved and we built a hundred and fifty statue bases around the country and then built an augmented reality app so that when you walked by these statue bases statues of the characters of the film would pop up so we're doing great work we think we've solved our business model problems we could look at it like this victory it's over but that would be a mistake and that would be basically falling into falling into the same trap of ten years ago just getting by thinking you solved the problem sticking true to what we know and the issue is the world is changing faster than ever I'm sure every speaker today has talked about it but technology is changing so fast that we can't count on our business models one year from now and we have to treat what we feel like is victory is more like a pit stop everybody internally when we cross a lap thinking about how can we retool the engine to compete for the next year and that's proven out this is our saying internally there is no transformation moment there is no AHA it's an operating model everyday what's happened since 2015 the print advertising market is bottomed out we're looking at 15 to 20 percent declines every single year everybody I talked to so if I meet people outside of marketing and advertising if I talk to my dad or my uncle and I say I work at the New York Times they say man it must be hard to work at a newspaper you've got to be digital I would argue now it doesn't mean anything just to be digital you have to be essentially everything to compete Google and Facebook have completely annihilated the digital advertising market the ad tech industry as we know it the one that we all if any of you guys have seen the Loom escape with all the different ad tech vendors that's gone Google and Facebook are now taking 85 cents of every dollar those digital first companies that we wrote about in our innovation report since then BuzzFeed famously has missed its earnings and I'm not calling them out I love BuzzFeed that famously missed their earnings had to introduce banner ads to start to bring in more revenue Mashable got rid of its newsroom we all know what happened to Yahoo these are different times to be digital is not enough but for us we're facing challenges again we had this thing our journalism no matter what we know people love it it's something that is so differentiated in the world and it's really hard to replicate this is our famous photo of the migrants from Syria I think you just saw this in your last presentation this ended up willing winning a Pulitzer Prize we know people love it so how can we find a way to get people to pay for it the paywall model at the times with one of the biggest moments probably in our history it was a big gamble and the head of the New York Times digital newsroom at the time was adamantly against it so the fact that we were charged for our journalism and restrict the amount of people that could see it fast-forward to today we have the single largest pay wall in the world around journalism but in 2016 we only had a million we had a million we had ad business that was doing pretty well I was sitting back I was doing my day to day activities little did I know that the executives had been back kind of strategizing thinking about our strategy moving forward and they came out with another report called our path forward and it basically said we will be a subscription business first and the way that the New York Times in spin survives if we get to eight hundred million dollars in digital revenue by 2020 and that essentially became my goal it was unclear how we were gonna get to it but I know now that I have to get to eight hundred million dollars by 2020 so this is a pretty dramatic challenge the business model can be summed up in five words make something worth paying for that's it everything else will be downstream from that it seems so obvious but it really isn't if you look out into the world of media companies how many media companies can you count our consumer or subscription first most are advertising first and we would argue that being advertising first is a means to an end it ends up making you having to chase scale do things that consumers don't love but we know if we stick to this we ultimately can get the people that love our product go to it every day and those are the people that advertisers want to reach more than ever this was one of the statements coming out of it so this was 2015 we'd come out with this report is basically a call to arms we need to make something worth paying for most of our journalism at the time was confined to a newspaper a mobile app and a website the mobile app the mobile kind of craze has its coming you know every year is the year of mobile the year of mobile the year still hasn't hit yet there was this call to arms in the building to do things differently and to innovate and I never would have thought that the first big wave of innovation would come from this cardboard box but it did three very risk-taking individuals in our newsroom dropped this box on our chief revenue offers officers desk and said we have this crazy idea what if we take the Google cardboard and distribute it to 1 million of our newspapers for subscribers and to put that in perspective people had to hand pack these boxes in Kansas City 1 million of them and package them in one by one with our newspaper to get them so when you get presented this risk you're an executive at a company you generally you get a business plan it says we can do this it's gonna cost us 2 million and it's gonna make us 5 million over the course of two years in the case of this it was put on the desk and said gonna cost us probably about four and a half million dollars we have no idea how much money it's gonna make and no idea if people are gonna like it so our bosses said yes which is great what happened will be loved about this project and it proved it to us was that anytime we innovate we're gonna stay true to who we are the New York Times is always about telling the most important stories in the world drawing attention to the world's most important events and you see a lot of innovation out there as we talk about AR MRX RoR all these new technologies coming out there's going to be a temptation to innovate for innovations sake and that film the displaced took you through the migrant crisis through the eyes of three child refugees in Sudan Syria and the Ukraine sent the film out not your typical VR film alongside another film that we had shot and if you think about VR the ability to take someone to a brand new place I'm arguing that no one has been here in this audience it's Pluto takes nine years to get there I think the space shuttle Discovery took nine years and they had three hours to circle the planet collect the data they sent it back times newsroom rendered it we published this film so these two films distributed with this cardboard the Sunday magazine cover story and what happened the readers loved it it became this well we will all later show you is called the Wright brothers moment at the times are you reading the single-biggest not necessarily for our future but in a single moment one of our biggest moments of the last 10 years we saw reactions from children who had been given the cardboard box from their parents gathered around a Sunday table two grandparents who were experiencing virtual reality for the first time we were following this live and so was our advertisers like any new thing we want to learn how to make money from it too we always want to check three boxes our readers are gonna love it our newsroom will love it and we can make money from it in this case right alongside our newsroom films we and my team built a film for GE about biomimicry the idea that different species of animals take cues from one another involve over time so we checked all those three boxes and ended up with a can lie on another victory so we just crossed the finish line again virtual reality is the future and actually if you look back into the press there were some articles saying has the New York Times gone in all in on VR is the entire newspaper gonna be in virtual reality every day I would say no but what it did teach us is that no matter what the medium we want to be true to ourselves and this this again was an experiment but now has allowed us to just scale across many different platforms and the most interesting one that's going on right now is with audio so the daily has been this crazy phenomenon for us the idea that behind the scenes with our journalists would be our competitive edge the most remarkable thing about this is when we launched it we had an advertiser who was along with it I was BMW and we guaranteed 700,000 downloads the daily is going to cross 100 million downloads this year it is a hit our host has now groupies which I couldn't believe it Michael bar bar Oh does anybody in the audience here listen to the daily yes okay good we have international listeners too so the daily was interesting if you look at a news organization and you think about the commoditization of news the temptation with audio is to come out and do our top 10 headlines every morning now what is the differentiation for the New York Times to do that now if you go every single news organization around the world has your headlines to know this morning what we know we can do better than anyone else is take you behind the scenes of the world's most important stories then you guys have followed what happened over the last week we broke what will be probably the biggest story this year which I never thought yellow so for Bill O'Reilly who happened earlier this year and I don't know if Bill O'Reilly makes international news but the sexual harassment claims around Bill O'Reilly was a huge scoop Harvey Weinstein will break that that'll go down as one of our biggest stories I would say ever this has been an incredible scoop and the daily has basically allowed us to take that journalist who broke that story and walk you through in a personal way how that story came together the people that they talked to and a much more conversational experience and it's taught us something that I'll take you through as our last lesson and it's one that we opened with but it's this idea I think I'm gonna play a clip here actually from Rekha meeting if it plays do we have sound it was clearly a moment when when the families and friends of these young women who had been missing for three years or showing up to check in and chat support then we were led to the tent we ducked in and as soon as I put my head inside there I just realized we had no place being there oh my god so these young women just they looked at catatonic I mean they looked like they had fainted or maybe were in a coma or something so ruck Meany is arguably the world's biggest expert on Isis and terrorism she spends most of her day combing through terrorist social groups chatting with them trying to figure out what their next move is she was there personally when she caught the German government paying off Isis for hostage hostage exchanges to just report that news in a briefing isn't enough but to take you behind the scenes on her day to day experiences is really powerful and this brings us to the last point and ties into the political climate today the idea that news is a relationship business now again you think back five years ago all of the conversation was around Facebook and Instagram those were gonna be the places that everybody will get their news everybody's gonna get their news from Vice Fox and BuzzFeed it's gonna be in listicles it's gonna be in short form video that hasn't proven out and the one great thing that's gonna come out of this political movement is the reinvigoration of journalism and people's belief that you need quality journalism to understand what's going on in the world what happens when you don't believe that is fake news when you lose connection with the people that provide you the news the quality behind it the process behind it the organization that allows you to trust what you're reading you get this and I think everybody in the world was to blame for what happened this guy's thinks we are the fake news he's gonna keep saying that every single day he has put us in an interesting position and one that I admire our response you could be tempted to be the opposition in this environment but we are not the opposition the New York Times is here to hold truth to power and help people understand what is going on in the world not to oppose a specific political party and that's for one specific reason if we are the opposition what happens when the other political party comes to office next term we can't just be their supporters we have to still maintain this the same truth to power so we focused on what we do best so we invested in our brand and the search for truth we ran our first big brand campaign in our history this year we aired it at the Oscars joga 5 made this and the campaign is called the truth is hard I took home some can Lions this year it's meant to be provocative but not to just be opposed to Trump it's meant to talk about and spark a conversation around the fact that getting to the truth the hard to find facts requires journalists not just at the New York Times but at the Washington Post or the Telegraph here you need journalists to get to this truth so I'll finish on this I talked about our business models there's been a lot of drama and that's gonna pat ourselves on the back we've done an ok job so Wall Street probably would have picked the fang Denis and you guys probably don't know what the thing is but it's Facebook Apple Netflix and Google used to be fangs but the ass had a really tough year so snapchat if you would have put your money you had a choice you called your stockbroker last year he said I want you to go all-in on the New York Times screw Facebook Apple Netflix and Google you just said you were crazy you're fired I'm gonna go to the next guy that would have been a better investment so the New York Times stock has outperformed all of these organizations over the last year we're having a record year all we want to do is put more journalists on the ground and tell more stories so thank you I appreciate the time and hopefully you guys will all subscribe after this [Applause] [Music]