Web 2.0 - Barry Diller and Arthur Sulzbergerby Daniel H. Steinberg
Barry Diller and Arthur Sulzberger, Jr. talked to Web 2.0 Summit program chair John Battelle about publishing content online. Sulzberger is chairman of The New York Times Company which now includes NYTimes.com, Boston.com, and About.com. Diller is the chairman and chief executive officer of IAC/InterActiveCorp, and chairman of Expedia, Inc. In the second half of their discussion they turn to community created content and answered questions about its role in their various websites.
This episode is sponsored by the Intel Software Partner Program.
This transcript created by Casting Words.
ANNCR: Arthur Sulzberger Jr., chairman of The New York Times Company, and Barry Diller, chairman and CEO of IAC, Interactive corp., and chairman of Expedia, Inc., spoke about media at the Web 2.0 Summit 2006. Here's Web 2.0 Summit's chair, John Battelle, in conversation with Barry Diller and Arthur Sulzberger.
John Battelle: Next up, this is a great conversation between two very well known people in the media and internet space. Arthur Sulzberger, the chairman of The New York Times Company and the Publisher of The New York Times, and Barry Diller, the Chair and CEO of Interactive Corp. May I ask you guys to come on up? I'm sitting here. You guys sit here. While you're coming up, we've got to give the biggest sport award to Barry because I want to tell this story. I had a call scheduled with Arthur last week....
Barry Diller: I feel like Eloise at the Plaza, I mean....
John: I'm sorry. I'll get a bed board in for you.
Barry: Thank you.
Arthur Sulzberger Jr.: What does that mean?
Barry: Reinforcement. Eloise at the Plaza? It's a long story.
John: We've got time, but we'll get to that. Let me finish first. I had a call with Arthur to prepare for this last week, and I did my usual research. I looked for stories that might pertain to the both of you and I found Geraldine Fabricant's story about your pay package, which I read with great interest. Actually, I had already read it, but I reread it with great interest and then I asked Arthur about that. I said, "Won't it be a tiny bit uncomfortable, you two being on the same sofa, with The Times beating Mr. Diller up a little bit."
Arthur said, "No, I'm sure it will be fine, there won't be any problem." Then, I found out that you had even taken that a little bit further.
Arthur: This is true. Really, on behalf of all of us in this room, most of us who are incredibly jealous....
Barry: I'm sure this is going to be very sweet and thoughtful.
Arthur: I want to present to you this plaque of that story, with a beautiful photo, and here's the good news: the drinks are on Barry.
Barry: Yes. Arthur, could you move that way. This is nice. It's almost as good as the one I made for myself.
Arthur: I couldn't afford that one.
John: Ok, now that we've managed to break that ice, let me start this way. Both of you run businesses with lots of different moving parts. We just had Eric here speaking about his business. Both of you have companies that partner very deeply with Google, and compete in many ways. You've got Ask.com, which is both partner and competitor. You've go About.com, which is a very strong partner. Then, you've got a lot of advertising driven businesses, where maybe you're not sure whether you are a partner or a competitor. Maybe we can start with, picking up the narrative thread of the last conversation, what do you make of Google? Friend or foe?
Arthur: If you're asking me, very much a friend. In fact, Google is now the largest single business partner of The New York Times Company.
John: You don't find that to be a threat?
Arthur: On the contrary, we are delighted by them, and especially with About. We have a very important relationship with About, and I think everybody understands that. At The New York Times, it is clear that they are not in the reporting journalism media space, but I think it's clear also from the conversation that you had with Eric that they are in the advertisement space. Well, they're a competitor. They are a good competitor. They are also a cooperator and we're going to have to see how this all develops, but it is an exciting partnership that we have entered into. We like that.
Barry: I think the world is going to be more and more about competing and joining with. I think that as these things converge and converge, it's going to be impossible not to. So long as you all know what camps you are in, and where, obviously, you are cooperating together, a partnership or whatever you want to call it, or a client relationship or whatever, then that's fine. Then you go into the other room and you bash the hell out of each other.
So long as you do it with the knowledge of these multiple hats that you wear, it balances itself. It's ok in life to do that. If you actually had an approach which is, "because you compete with me, I'm never going to talk to you about anything, " that won't work today and is certainly not going to work tomorrow.
I thought I answered that very artfully about Google, don't you?
John: I did, but I'm going to dig in a little bit. Are you concerned that, at some point, because of its market dominance or because of the fact that it is hiring thousands of sales people, some away from The New York Times, some away from Timing, that at some point you become the inventory for Google to sell as opposed to an independent business? Do you worry that perhaps there may come a time when you are too dependent on them?
Arthur: No, I don't worry about that.
Barry: I don't either.
John: Can I ask why?
Barry: Because I don't believe that, certainly in the media, the world holds to one anything called media. It's just not possible that it's all going to be in one place. Leadership will be leadership, and frankly I don't care about this whole concept, the GE concept that's number one and number two.
First of all, in the media world, that's absurd. Media businesses have been around with four, five, seven principal players changing positions at various times, with one company sometimes being in the lead of it for seven years or some very long cycle. So, I just don't think it's going to be an all-or-nothing world. I can't believe that that's possible.
John: Related to that, both of you run businesses that are very much about brand. In fact, you described IAC as a stable brand, The New York Times as the sterling brand in news. How do you find your brands changing and shifting as you try to move them from a business model of sort of packaged goods media to the web, where you're not seeing as much revenue, although it's growing much more quickly. I'm curious about The Times.
Arthur: Well, let me set the stage briefly for The New York Times Company, because I think most people don't know that we are, in fact, the tenth largest internet company in the world, in terms of page views coming in. That's at About, that's at the New York Times on the web or at boston.com or other properties. So we've not only embraced this world, but we've found ourselves in a somewhat leadership position. The New York Times in particular, because I think you asked about that, we long have had the mantra that we must be platform agnostic. That it's not about the paper that makes newspapers exciting, it's about the news. So the work that you're seeing us do on the web is a sort of core element to what we are now. Translating that into a business model that is able to sustain the enterprise going forward is that key to re-balancing our business.
John: But can you pay for the New York Times journalists on New York Times online revenues?
Arthur: No, and thank Goodness I don't have to. The New York Times is on the web, it is profitable, it's growing at a tremendous rate, we're very excited by that. But we still have the print vehicle which is in some areas struggling more than others, but it's still a highly profitable business operation. So we're not facing a moment where we have to make a decision. We're going to continue to grow, we're going to continue to expand and the digital advertising is there and it is coming to us.
John: Now the pieces that I see that are advertising-driven, how are they doing, they are the fastest growing, aren't they, the online advertising pieces of your business?
Arthur: I mean, there are some other parts of the company in transactions that are growing faster, but they're growing really quite well. Certainly, the query growth at ask.com has averaged about 30% growth on the clock, almost every day this year, for about a year since we made that change to ask.com.
John: By killing Jeeves?
Arthur: We ditched the Jeeves, we didn't kill him.
He is somewhere.
John: I saw a Google engineer who come back as zombie Jeeves for Halloween.
Arthur: Yes, good. And that's where Jeeves is.
So advertising, for us, is growing well.
John: Now, as a media person and a brand guy, what's your strategy with regard to new forms of content? Like, you bought College Humor, or a majority share of it.
Barry: No, we bought it. I don't want say it, that sounds cruel, but we did buy it.
John: Are you going to be buying a lot more sites like that?
Barry: I don't know. We're certainly interested. We are also interested in creating them. One of the things that I think is great is that the time has now come when you can put real capital into creating programming of all different kinds and length and cuts and text/video or combinations thereof, etc. And I think it's now yet really there, but in the next couple of years, for certain, I am quite sure that being able to create programming (and I don't mean being able to create one or two minute pieces, I certainly don't mean that you're going to be creating a theatrical motion picture for the internet) but different hybrid forms, pure actual program creation, now is the moment for it, I think at least. That you could justify putting real capital in it, so we're going to do so.
John: Is that going to be part of the strategy of the New York Times, or is it going to be more hue to the original brand of news? Because about.com is...
Arthur: Well, about.com is its own entity and it's almost a form of citizen's journalism in a real way. But, for the Times, at the core of what we offer is journalism. And that can't ever change, that's the brand, I promise. What has to change however is our vision of how we interact with our community and how we allow our users to not only get the news and information that they want from the Times, but integrate into what we offer, the blogs that know what they want, the blogs that they don't know what they want. Tom Friedmann every morning would just say, "Here are the three blogs that you know ought to read today." That's a pretty powerful tool and that's where we are moving and should be. So, to give a greater ability for the Times to be part of the many conversations that are taking place on the web.
John: However, the conversations that Tom Friedmann has now cannot be pointed to by people with blogs because it's behind the pay well of Time Select.
Arthur: With the exception of this week.
John: Now, did you notice that Arthur made it free this week?
I think there is a plan there.
Arthur: Yes, you are right, Times Select, with the exception of this week is a paid site. Now, that doesn't mean that all parts of what Tom Friedmann does have to be part of a paid site, but Tom is. And so many of our op-ed columnists and people who don't hear it in the printed pages because it is a much more robust site.
John: How is it going?
Arthur: It's going well, it's a year into it. We're in the mids of our first annual re-op. If Times Select was a newspaper that was part of the New York Times company, it would be our third largest newspaper, after the Boston Global and the New York Times.
John: Are the writers happy behind that wall?
Arthur: I think that they understand, as do we all, that quality journalism is expensive. That if you are going to have the number of people we have in Iraq, that is an expensive proposition. If we're going to give Tom and other columnists the ability to pick up at a moment's notice and wind up somewhere around the world, that's an expensive proposition and we need to sustain that. It would be great if the New York Times in print were free, it would be great, it is not. And that is to sustain our journalism.
John: It's Election Day. Both of you have been known to hold opinions. I'd like to ask yours, not of any current races.
Eric Schmidt: Why not?
John: OK. But I would like to ask about some policy issues. What, as you run your companies, as you look at the internet industry broadly and its place in the World, what are some of the major issues that you think our elected officials should be paying attention to and that we should be paying attention to that perhaps we're not.
Arthur: Your turn.
Eric: Obviously, I think you said you were going to do debate. How, if there could be a debate on Net Neutrality is beyond me? Who is on the other side of it?
John: Well, we found the guy from Cisco.
Eric: Other than Ed Whitaker and some...
John: We found the guy who sells a lot of hardware to Ed Whitaker.
Eric: OK, so that would count. But they are totally disqualified, I mean it's ridiculous. It's impossible to argue against Net Neutrality, we have this magic box and this magic thing that we get to push a button and publish to the world. It's an accident, it's the first time in the history of the media that there haven't been distributors, there haven't been people who will say, "Well, it's a scarce resource and therefore we are going to dole it out to you on the basis of how much you will pay us." This is, "Push a button, publish to the world with nobody in between the creator or originator and the consumer." How could we let that go potentially awry by people whose stated positions is that they are going to do that?
Everybody, the only thing that we have to worry about, because connectivity is now assured... Now, we don't need to worry, we have a pretty big bandwidth right now, we're going to have a fat enough pipe. And so, the infrastructure is assured. The only danger is that we screw up the very basis on which that system works. So I think everybody has to get very voicy about this and particularly this next Congress is the ground for it. It will ever happen I believe in this next Congress or I don't think it will happen at all.
Eric: Arthur, what do you think?
Arthur: There's nothing that Barry said that I disagree with on Net Neutrality or. For those of us in the journalism game there are other issues out there and I want to commend Eric about what he said about the rights of privacy, the rights to keep the information flow open. That's been a big battle for the New York Times and for many of our colleague newspapers over the last few years.
Eric: You have locked horns over issues of right to publish.
Eric: With the White House, even going to the extent of holding on a story for a while in deference until you decided you couldn't hold any more?
Arthur: Until we decided as we continued to report the story and this is the NSA wiretapping story that you're talking about. Until we were convinced by continuing to report that story out that the assurances that we received from the administration were not in fact as valid as they had laid out them to be. At which point, we realized, and for s story like this there is always a balance between national security on the one hand and civil liberties on the other. And newspapers are surprisingly good at making that balance, not every time perfect, but surprisingly. And it became clearer and clearer, as we continued to report the story that the civil liberties part was weighing heavier and heavier. And that's when we made the decision to publish.
Barry: Do you think that companies such as Ask, for example or Pricey, even the New York Times, certainly Google, who hold a lot of information about where people go, what they look for, what they do when they get there and so on might also have to make those balanced decisions in the future.
Arthur: Sure you do, but like anybody, if you run a department store, you know a lot about people. You don't tend to say, "There's this big fat woman in the closet there" and you don't tend to treat your customers badly. So you do make judgments all the time, you have lots of information and if you don't serve your customers, which means that you serve them and you respect them, then you're going to be a dead duck. But you do have to wait. It gets more and more complex because the process of information gathering, how you segregate it, who gets their hands on it, how do you protect it, all of these things, because of the immensity of it, it's in so many distributed hands that mistakes are going to get made, for sure.
Barry: And the challenge is not just in this country, Eric spoke eloquently about that. But the challenge is increasingly internationally. And it's not just the laws of the United States that you now have to recognize, it's the fact that if you are going to China, you have a different set of laws, and so on around the world. That makes it immensely more complex.
Eric: You mentioned blogs before and the conversation and I want to bring up with Barry. You spoke last year, I brought up user-generated content and you didn't exactly poo-poo it.
Barry: How could I? Most of the stuff we have is user-generated content. How do you think match.com survives, it isn't us that's making up the flirt.
Eric: But you did say that you didn't think that, you gave the impression anyway.
Barry: I said something different. I'm kind of leading the witness...
Eric: Lead on.
Barry: I said and I believe that the talent pool is finite. There are only so many people of the kind of talent that is going to resonate really widely. Now, obviously, anybody is capable of making up something that four people are going to like or 44 or people who are in their family or other things like that. And every once in a while something is going to come along. That whether is the dancing person in the bathtub or whatever it's going to be that it's going to be a flash on people, but that's not what I'm talking about in terms of talent. What I'm saying is that there are only a group of people in the whatever amount you would like to call them, it's not in the hundreds of thousands, I promise you. And those talent outs and that is the pool that we're going to extend upon as we always have for things that are going to generate to wide audiences.
Eric: Right. What's your view of the user-generated content?
Arthur: I'm going to put myself in Barry's camp. It's a wonderful thing that people have the ability to now post their opinions, post their information and in some cases even, rarely, post their knowledge on a web.
Eric: No, Arthur!
Arthur: It is a wonderful thing that all of us and the rest of the world has the ability to access that. Those are the good things. "Speaker's Corner" writ large. But at the end of the day, we're making a bet, as we have for 150 years, that quality information, information you can trust, not information that is inexorably accurate (we are a human institution and we make mistakes), but information that is processed, thought about and when the mistakes are made, corrected. That plays a role particularly in a democracy when all of us on this day enter a voting booth and need to know what it is you're pulling the lever for.
Eric: Isn't though, would you agree perhaps, that there is a model for more good information? In other words, there are only so many outlets: the New York Times or Fox.
Arthur: Yes, I do.
Eric: Now, a fellow who is extremely talented at reporting on the local school board, with most of the local papers I have some statistics here: the daily circulation of the LA Times is down 8%, the Chronicle 5.3%, the New York Times 3.5%, the Boston Globe 6.7%. There are four reporters in my local paper where I live in. Four, and they don't cover the school board where I live anymore.
Arthur: Absolutely, and this is important. Newspapers have to and are making increasing use of that kind of journalists, because it can be...
Barry: Tapping into that town.
Arthur: Tapping into it, but making judgments about it, and saying, "In our judgment, we think this is news, this is information and opinion that is valuable, that is worthy of your time. We're not going to be able to make all the choices, but we're going to make some."
Barry: You're talking about others...
Barry: ...and I don't think Editorship is going away, as a matter of fact I think it's going to be even more prized in the future.
John: I agree.
Barry: So while everybody would like to believe that their entrails are of great interest to everybody, it's just probably not so.
John: I'm arguing for short of an amateur class of people who are very good at doing a few things, whose talent would never have made it to the pages of the New York Times. But because they're extremely good at covering "the school board" in a county...
Arthur: Right, and we need to embrace that.
John: ...that's a new form of talent.
Arthur: Absolutely, and we need to embrace it, and we are embracing it.
Barry: It's a different... Sorry. Please...
Arthur: No, go ahead.
Barry: No, no, no, I'm using the word "talent" in a different...
John: I understand, talent to reach wide audiences. I understand what you're saying.
Barry: My definition is really different, and you misconstrue meaning if you think that what I'm doing is being negative or saying that you know, "that the great amount of people, and the great long tail you know, have nothing to contribute to anything." I don't believe that at all.
John: Well now that's cleared up, let's go to questions. We start over here?
Alan Worms: Yeah, my name is, Alan Worms. I'm with Participate Media, and among other things we publish "realclearpolitics.com." We're going to do 40 million pages this month, I don't know exactly how many unique visitors. We did more than this at the 2004 election. Our site is primarily editors, and I think it's a little bit, I don't want to say condescending, but the fact is I think a lot of people are creating content in areas that mainstream media have not focused on, or have not delivered on. You need to recognize that there are a lot of great people out there that who are going to have the opportunity now because costs are so low, to deliver that kind of content, and it's not just amateur-hour. I just want to make that comment.
Barry: Yeah, please, I'm not saying that it is, and I don't mean it in that way. I'm just purely talking, and I'm really talking from this "old media sense, " and it really deals, it deals with the creation of essentially narrative forms that I'm talking about. I'm talking about story telling more than anything.
Alan: And I agree with that. I was more referring to Mr. Sulzberger's comments on "the news", but thank you very much.
Barry: Oh, sorry.
Arthur: Well actually I'm surprised because I don't think you and I disagree. I have a good friend here in San Francisco, "Joan Walsh" who's the editor in chief of Salon. They've been doing what you're doing to a large degree I think for a number of years. I mean that is clearly good, solid journalism. So you and I are not disagreeing. I think where I started was, it doesn't matter how you present the journalism - if you present it on paper, if you present it a digital form, if you beam it directly into peoples brains. It's the quality of the reporting and the editing that's important, and - congratulations.
Alan: What I'm saying is, "the old line companies do not have a monopoly on quality" - that's all I'm saying.
Arthur: I couldn't agree with you more.
John: Over here on this side.
JD Laska: I'm JD Laska from Ourmedia. I want to pick up on this where we actually had it out last year, me and Mr. Diller on this subject, so I'm going to ask a question of Mr. Sulzberger instead.
JD: And that is - You know you may have considered journalism before, and I don't see the New York Times for my discussions with a lot of your editor's basically hiring a cadre of citizen journalists to go out and cover things, because of all the different complications of going out and fact checking, and vetting all that information. But I don't see the New York Times embracing the idea of citizen journalism to the extent that I think you have an opportunity to. So when I see the BBC or I see the Dallas Morning News actually showcasing photographs of, people are going out and taking photographs of disasters, or covering elections, or political rallies. The New York Times reporters and photographers can't be everywhere, and there's an amazing amount of incredible work that's being created by this talent pool of amateurs that John mentioned, and I'm wondering why don't we see more of that on the Times? Why don't we have these kind of showcases of people who are out there you know creating this high quality work, the amateurs?
Arthur: The first answer is: you will be seeing more of it, and we are looking at ways of doing that, that provides information gathered by if you will, the amateurs that we trust because at the end of the day, we're putting our name on that work. Now finding that balance is not easy, and you could argue we've been a little slow at it, I won't disagree with you. But the fact is, as we continue to unveil the Times on the web, continue to unveil the pages of My Times, things that are coming on-line now, you're going to see the ability to do that in a more robust way than you have in the past.
John: All right we have time, I'm sorry, but just for one more.
Evan Pagan: Hi, Barry. Evan Pagan, Hot Topic Media. I'm the founder of one of these newfangled kind of media models that's been you know growing for several years under our own power, profitable, the intersection of media technology marketing, a lot of things. It's neat to see all these other businesses getting recognized as valid models, and you know I see that as validation in us in some way. What I'm looking to you for is, from your perspective after doing this many times - How does someone in my position look at building long term equity value? Is there something that you learned that might be a counter intuitive thing, or something, somebody who hasn't done it before wouldn't know?
Barry: Don't sell it.
John: This is the guy that bought "College Humor."
Barry: He asked me, you know he's asking me from his point of view. Believe me, I'll try and sell him to sell it, but in this venue if you ask me - "What would I do if I had an idea today?" And because I think money is the easiest thing to obtain today on commercial terms, I don't think, unless you're going to go build server forms, I don't think these things are particularly capital intensive. So what I would say is, "take your idea, if it resonates with people keep going, keep going, and so long as it interests you, don't sell it to private equity, God forbid...
Barry: ... and just ride it. I think that equity is built by holding on. Now sometimes you've got to sell a little of it, but the idea is - if you want to build equity, hold on to it if you have something valuable.
Evan: Thank you.
John: Very good words to close with. Thank you very much Barry, thank you very much. Arthur, that was great, thank you very much, thanks a lot.
ANNCR: Barry Diller and Arthur Sulzberger at the Web 2.0 Summit 2006.
Daniel H. Steinberg is the editor for the new series of Mac Developer titles for the Pragmatic Programmers. He writes feature articles for Apple's ADC web site and is a regular contributor to Mac Devcenter. He has presented at Apple's Worldwide Developer Conference, MacWorld, MacHack and other Mac developer conferences.