When John Paton became CEO of the Journal Register Co. in early 2010, he freely admitted that the publisher, which filed for bankruptcy in 2009, was a poster child for what ails the U.S. newspaper industry. The group had all but ceased investing in its facilities and titles, and even as it emerged from Chapter 11, faced an uneven future at best. But in the past year, Paton and his executive team have revitalized the company. Paton in particular has won plaudits from industry critics, many of whom say he “gets it” when it comes to embracing the Internet and the newspaper industry’s digital future. His mantra: If you can no longer stack dollars from print advertising, then you better know how to profitably operate your newspaper by stacking the dimes digital advertising now yields. News & Tech Editor-In-Chief Chuck Moozakis recently interviewed Paton.
News & Tech: So why have you become such a star among those who believe the newspaper industry model is broken?
Paton: First, we are doing what we said we would do. Second, I’m one of the broken. I’m 53 years old, and I’ve been a copy boy, a reporter, an editor-in-chief and a publisher, and now I’m a CEO. It’s difficult for critics to say that I don’t know newspapers. When someone criticizes the industry from the blogosphere, it might be easy for the industry to say that the blogger doesn’t know our business. If I say it, it resonates.
News & Tech: And what are you saying?
Paton: That we’re no good at (migrating to a digital model). So what I say is that if you aren’t good at it, then put digital people in charge of everything, and that’s what we have done at JRC. Our digital guy is head of all sales, not just digital sales. Our vice president of content is in charge of all content, not just digital, and our business development guy is head of all business development, not just digital business development. In 10 months, we’ve taken JRC from a print company to where the large (digital) audience is.
News & Tech: But how can you sustain a business when digital revenues only generate a tiny portion of what print revenues generate?
Paton: Then start stacking the dimes. If a digital ad is worth a dime, then find a cost-effective way to get those dimes. Look at it this way: Adobe spent millions of dollars to develop Flash and Acrobat, but they give those apps away for free, because free is the market. We have a similar situation. If the audience you have is only worth dimes, then you have to find a cost-effective way to create and deliver content to that audience.
News & Tech: And how do you propose doing that?
Paton: It’s a two-part strategy. The first is outsourcing. Yes, it’s blood on the floor, but why is outsourcing a $4 billion a year industry? Because outsourcers can do their jobs better than we do. It’s not our core competency to print and deliver. We do that because we have to; in fact, 66 percent of our cost structure is devoted to things we don’t want to do. Only one-third is content creation.
People keep talking about monetizing content. I’m not doing that. I’m monetizing the audience I have.
News & Tech: JRC was never considered an innovative, or even a very well respected, newspaper company. What did you have to do to get the company repositioned?
Paton: Necessity is the mother of invention. JRC had a terrible reputation, and they had cut costs to a point where they wrecked the business. The company I took over is a company that went through hell and came through the other side with a committed workforce. We launched initiatives like the Franklin Project (where all of JRC’s papers were produced with open-source software) and launched the Idea Lab. These initiatives, among others, helped energize the company and we are beginning to see results. I wanted to become transparent, so I began blogging to both our employees and to the public. That’s not necessarily innovative, but I did that because I couldn’t even e-mail our employees. Our infrastructure didn’t work. We had a collection of e-mail servers that didn’t communicate. It was ridiculous.
Today, this company isn’t broken any more.
News & Tech: Talk about your open newsroom initiative at The Register Citizen in Torrington, Conn., which features a community media lab, a community room and even a café where the public can gather to drink coffee, eat pastries and blog.
Paton: Torrington’s a perfect example. It’s a town like others in America, and it’s been struggling. The newspaper itself was bad, it was a horrible place to work and it wasn’t making any money. Today, the paper has six times the audience online as it does in print, has a growing top line in advertising and it’s profitable and operating from a brand new space. We outsourced printing and distribution. It’s a paper “of the Web” and not “on the Web.” We are part of the conversation; we’re not on Facebook, we are part of Facebook. The office and building look like the Web. People can come in and interact. The first week it opened (on Dec. 13), we had more than 100 people visit. We’ll install community media labs in all of our 18 dailies’ facilities.
News & Tech: Are you confident that JRC is now on the right track?
Paton: Absolutely. We’re now very profitable, with a 15 percent margin and more than $40 million in profits. JRC is no longer broken. It’s a proven model and as such it’s a company that should be looking to expand.
News & Tech: Still, do you find you have to continually defend JRC and what you’re doing to your peers?
Paton: It’s true that there are more fans for JRC’s model on the Web than on the print side, but I believe there is a growing level of respect for what we are trying to do.
News & Tech: What do you tell skeptics, or those who believe that relying on digital isn’t a sustainable way to do business?
Paton: If you aren’t doing what we are doing, if you stick to print, then I will tell you the day and the time you will go out of business.
News & Tech: What about paywalls? Will you institute those among JRC’s websites?
Paton: I’m not a fan, and I think the marketplace for these is limited. I don’t think it will be a success. I do, however, believe there is a possibility for publishers to create a revenue stream from tablets, but those streams aren’t going to be very robust.
News & Tech: Is the Internet viable?
Paton: The Internet will always exist. It’s now a big utility, like electricity. But the Web lives on the Internet, and I think it’s wise to ask what a sustainable business model looks like on the Web and how a sustainable business model is measured. Newspapers have been around for hundreds of years. With the Web, perhaps what we will see is a business that goes from zero to big very quickly, but be very vulnerable. So that’s why we have to completely reinvent to be successful on the Web.
News & Tech: What happens if print does disappear? What does that mean to the future of a nation?
Paton: The demise of print is not a threat to democracy. What is a threat is those entities that are no longer willing to invest in original reporting, and that is why I’m pushing (the reinvention of JRC) so hard.
Our horse is dying; we have to get a new horse. The idea is to keep the goals of our work the same, the goals of informing, of being a good member of the community, someone willing to shine a bright light on what’s wrong. Those goals remain at the heart of all good journalism. I don’t personally care if print has to go away, as long as there are viable alternatives and commitments.