For legacy media businesses, adapting to the digital environment can be arduous. For the latest in our Confessions series, in which we grant anonymity in exchange for candor, we spoke to a digital chief at a legacy publisher about why some traditional media companies are “in denial” about the future of digital — and why he believes blaming platforms for publishers’ revenue troubles is lazy.
Excerpts lightly edited for clarity.
What are the biggest pressure points for you?
The challenge for senior management in legacy media companies is that they have to run two businesses with totally different operating models. To manage a legacy media business, which in all likelihood is in slow but inevitable decline, is to minimize cost and investment — all the areas you can cut — to slow that negative growth. It’s a very incremental job.
And on the digital side?
Managing a high-growth digital business is completely different. You have a top line that’s taking off exponentially, and what you actually need to do is throw money at it to maintain the growth trajectory. Because there is no point extracting profit from a small business. You must invest so the business gets bigger so that when you do come to take profit from it, it’s meaningful profit.
Hence the tension.
The most senior people in these companies are always the legacy people as they’ve been there the longest. There’s not a single digital person in most of the chief executive roles in legacy media companies here. That’s a real problem, because the operating models of legacy and digital are so different.
If you compare the profitability of the digital part to the profitability of the print part, you’ll always be making much less money in your digital part because all you’re doing is re-investing it to try and grow quicker. But in many cases, these guys have their management looking at it saying, “Why are we losing so much money on digital? This digital thing is a disaster.” They’re not getting it.
So what’s a better approach?
The way you would fix that problem internally is to run the two things as separate businesses, but if you do that, you’re losing any sort of collaboration that makes it worth having that [digital] business within it at all. You essentially end up with two separate businesses.
How does that affect culture?
It creates a real clash because of how these competing business models play out on a daily basis. Everything from salary disparities to space or resource allocation. If you’re throwing resources at a problem to make it move faster — that generates huge resentment from people whose resources are being chopped to slow losses. It creates a “them and us” situation which isn’t helpful.
Has some of the sheen come off digital media this year, with all the issues around ad buying and measurement?
There’s always a little schadenfreude among some legacy media people when something goes sideways in digital. But what that fails to appreciate is that in the grand scheme of things those slip-ups and changes are utterly inconsequential. They may seem a big deal on the day, but the news cycle moves on. There’s no question the world is shifting to majority digital content consumption. If you’re celebrating if something goes wrong, you’re writing your own obituary sooner.
Platforms are often blamed for making monetization harder.
It’s lazy to blame the platforms. If you’re driving in Formula One, and it’s raining and it throws your car off, you don’t blame the rain. You’re not driving it properly or you haven’t assembled a team of mechanics who can keep you on the track.
How hard is it to attract and retain digital talent at legacy media owners?
Very hard. The history of legacy media companies in the last few years is peppered with examples of high profile tech people coming in and lasting a year and moving out again, because they discover the things I’m saying. It’s like the saying, “How many psychiatrists does it take to change a light bulb?” Well, the light bulb has to want to change. And the legacy media company has to want to change. They also can’t match the salaries of the engineers at companies like Facebook.
So, is all this fixable?
Yes. All these things are incredibly painful and frustrating. The only way to solve these things is to just keep working at it. There are no right or wrong ways of doing things, only different ways of allocating pain.