Fairfax’s Simon Tong on bloody noses, the fallacy of clickbait and the benefits of scale

The first time I met Simon Tong, he was only a few weeks into his role as managing director of Fairfax Media. Generally, those running media organisations are not particularly open when questioned about their own businesses, which seems fairly hypocritical given their desire for openness and transparency from the subjects of their work. But I was struck by his straight talking. There was no corporate side-stepping and he didn’t mince his words when asked how hard he thought it would be to move a company that was tied to print into the digital era. One and a half years on, he’s still speaking very frankly about the challenges, but he’s confident the company is now on the right track.

Tong’s previous role was chief executive of payments company Paymark. There were a few raised eyebrows when he was appointed as he hadn’t worked in media before, but it was clear he was brought in to see where the biases in the business were. And the big one for him was that having so many print mastheads was inefficient and didn’t reflect the demands of readers.  

As he said during his presentation at the MPA conference last week: “We simply can’t have that many cottage industries.”

Tong said he never really took too much time to think about media before he started at Fairfax, apart from his corporate training that told him to avoid journalists at all costs. Now he’s surrounded by them.

“I was told they were difficult and cynical but they’re a good bunch who just want to get on with what they do. For many of them it’s a real vocation and that’s part of the intriguing aspect of the industry in trying to recreate the model in a way that’s sustainable. You come to understand there’s a really important social role that’s being played by [journalists]and that’s what they want to do. That’s actually an interesting stretch when you’ve been in other roles when it’s just about the bottom line numbers.”

So does he feel he’s close to establishing that sustainable business model?

“I think we’re closer than we’ve ever been … The thing that strikes me most about the team is that they’re journalists first but they have to work with the commercial side of the business to find a way forward. No-one’s going to wave a magic wand and do it for us. That’s quite a big hurdle in itself. I’ve been to other media organisations where they lament that issue and they can’t find a way forward until they get together. We’re well past that. We’ve got rid of some of that internal rubbish. And then you start having authentic conversations about how you’re going to fix it.” 

One of the major changes announced a few weeks ago by executive editor Sinead Boucher was that editors of mastheads would be replaced with regional editors (and others would focus on specific areas of interest). And Tong says the main reason for that is because focusing on something like The Timaru Herald rather than the South Canterbury region “doesn’t drive the right behaviour”.

He admits these changes to the editorial set-up have caused “a bit of a ruckus” and a few people have left as a result. But he says the editorial team that is leading the charge is fully committed to it.

As part of its renewed focus on digital, he says its 700-strong newsroom has gone from producing around 400 stories a day to 1800-2000 a day. At present, he says half of its newsroom is writing stories but the recent changes are an attempt to increase that by 20 percent to around two-thirds.

“That’s roughly the number. This is about significantly increasing the number of people writing stories.”

So is this a good thing for journalism? And will those stories be of lesser quality than in the past? Baseline theory is all about the perception of change. Those who grew up in an era of bountiful sub-editors (and swam in the so-called rivers of gold) regularly point to a gradual drop in quality—and question the increasing complexity of the journalist’s job and being spread too thin—whereas those who grew up in this era are more likely to accept it as normal.

“I don’t think you could classify it as the old guard [opposing the changes],” he says. “There are purists but there are a lot of people very fired up. There are a group of people who have a pragmatism about them. They can see that what’s worked for the last 150 years isn’t going to keep working. One of the things I’ve said here is don’t expect people to feel sorry for you. You’ve been rorting them for 150 years, so they’re getting their own back and most people are also facing some sort of disruption themselves so you’re not alone.”

There’s also the kicker of journalists pulling up the rear in terms of trusted professions, so sympathy is probably in short supply. 

One of the issues with chasing clicks and audience above all else is that as The Onion put it, Miley Cyrus’ VMA performance ends up as the top story on CNN. There’s also a belief that the current demand for speed means being first and wrong is preferable to being second and right. Sub-editors were part of a system of check and balances (and, in the days when journalists called in the information, they were also the writers of stories). But with more senior journalists publishing directly online, and more pressure of journalists to write stories, some believe this will further erode the quality and lead to more mistakes.

At last week’s MPA Conference, Bauer chief executive Paul Dykzeul talked about his visit to Conde Nast in New York a few years ago. He was told The New Yorker lost $12 million a year. But it was a publication that stood for something. The media barons who traditionally owned media companies were willing to take a financial hit to keep these kinds of publications alive (the benefit of a portfolio approach is that the September issue of Vogue was able to cover the shortfall). There are still a rare few quiet billionaires and charitable trusts propping up loss-making media outlets, but publicly listed companies that demand returns for shareholders are a different kettle of fish. And the vicious cycle that many have talked about is that the cost-cutting exercises and gradual erosion of editorial resource ultimately leads to inferior products and smaller audiences.

There have been a few, admittedly rare examples of Stuff and other media entities getting caught out and cementing doubters’ fears, with the fake Greenpeace-GazProm polar bear story standing out (Stuff responded well to the gaffe and admitted its mistake). A recent fake release about chocolate bars being good for you was widely picked up around the world, and by 3 News and nzherald.co.nz. And there have been a few depressing studies showing how much PR-inspired content now features in the media, something Guardian journalist Nick Davies delved into in Flat Earth News.

“The newspaper is just one of several ways to get access to our content. That’s what I’ve brought to the table. I’ve said ‘guys, stop getting bent out of shape about how they consume the content, that’s their business, not yours. Your job is to give them content they’re willing to engage with’. You don’t want people telling you which supermarket to shop at or which type of milk to buy, or whether you buy online or in a store. That’s the change. We are organising the place so that we are far more flexible so we can deliver content in the right place at the right time. It’s pretty basic.”

Tong says the barbecue conversation he hears is that the quality has gone down and there’s not enough in-depth reporting. So does he believe the quality has dropped? 

“I would say journalists have been persecuted for the quality of their journalism for hundreds of years and they continue to be. I think journalists would be insulted by that. I think there’s a difference between recognising success as being on the front page vs. having an audience that engages with your content.”

He says he’d be really disappointed if it wasn’t debating the types of stories that are being covered, all the time.

“We’ve got people like Joanna Norris and Bernadette Courtney and Cathy O’Sullivan who don’t take any prisoners. That team is pretty well balanced and they debate those issues.”

He admits it doesn’t always get it right and “we could do a better job of letting our best investigative journalists have better platforms, both print and digital, for their stories”.

“If I had my way we’d be doing more [investigations],” he says, perhaps forgetting that he is the managing director and getting your way comes with the territory. Although, he is a pragmatist, and there are a few people in Australia who also have a say (and shareholders who demand a return). 

Across the business spectrum, media is one of the industries that’s most susceptible to change. And there have been some major announcements like Facebook Instant Articles and Apple News in recent months that have the potential to change the game for publishers.

But he thinks Fairfax New Zealand, which has almost completely replaced its executive team over the past year, is now more capable of adapting to those kinds of changes.

“I’m sure the other media CEOs would agree that watching out for one another from a competitive point of view isn’t the game. It used to be and that’s what kept things relatively comfy. But it’s about the global players. What are they doing? And all of them have desires to expand beyond what they do today. They’re competing with each other and to some extent you become collateral damage. That’s the thing we need to think about. Newspaper market share is interesting, but really, it’s not the major issue.”

Tong says he’s been surprised at the strength of newspapers. Before he arrived at Fairfax, he was one of the growing number who had stopped reading one (he’s also a Global Mode user). So he’s also had to shelve his bias and one of the things he has had to learn is how effective newspapers are and how strong the audience is for them and continues to be.

“There are several hundred thousand subscribers who still like getting that paper. That was one of the lessons. That’s still a good number in a market like this. And despite all the noise, they keep paying.”

But as has been the case for the past few years, that number is likely to keep heading down. And, like the landline, there is a threshold that people reach that allows them to cancel their subscription and start to get all their information online.

“The newspaper is just one of several ways to get access to our content. That’s what I’ve brought to the table. I’ve said ‘guys, stop getting bent out of shape about how they consume the content, that’s their business, not yours. Your job is to give them content they’re willing to engage with’. You don’t want people telling you which supermarket to shop at or which type of milk to buy, or whether you buy online or in a store. That’s the change. We are organising the place so that we are far more flexible so we can deliver content in the right place at the right time. It’s pretty basic.”

The idea may be basic. But the execution certainly isn’t. And a host of large, previously very profitable media companies are struggling with the challenge of moving away from their legacy and competing with digital pure-plays and global tech companies.  

“It’s made complicated by people. People choose to make things complicated if they are threatened or tipped out of their comfort zone with what’s proposed. The idea is to write a story, stick it in the system, then take that story and spit it out into a mobile, or a tablet or a newspaper or maybe stick it in radio or television. That’s not complicated.”

Too easy then. The problem is that when journalists did that in print, the advertising and circulation revenue was enough to keep the lights on. But digital revenue for news publishers, aside from some special cases, isn’t making up the shortfall. In Australia, Fairfax chief executive Greg Hywood said digital revenue made up 35 percent of the metro titles, although that’s including digital subscription revenue. And ex-Fairfax journalists Tim Hunter and Hank Schouten have said print still makes up between 80-90 percent of revenue.

So is that accurate? Tong wouldn’t give any specific figures on its digital revenue, but he says it has grown that number significantly.

“We’re basically where we said we’d be and the call we made in terms of growth was a big one. In terms of market share and growth, what you’re looking at is Google and Facebook’s share so we’re running at a million miles an hour to keep pace, but every day we’re building the market out, whether it’s video or native advertising. The key question is does all the print advertising translate to digital. And the answer is clearly not. Or a mobile platform, Clearly not. It’s not the same business model. You don’t have the same domination. It’s smaller.”

It’s human nature to try and fix the things that are failing. And while he says you have to defend the traditional heritage business while you’re building the new one, at some point you’re going to have to cannibalise your own business. And, in keeping with the philosophy of Steve Jobs who killed one of the most successful products ever to make a better one, Tong would also rather cannibalise his own business than let someone else do it.

“If I crank it up and get amongst it I probably get a bloody nose on the way through but I’ll get there. Otherwise it’s denial. [Relying on print] sucks up value from the business and that can’t be put into digital.”

So how bloody has his nose been so far? Fun is not a term you normally associate with being the leader of a traditional media company in this era. But that’s one of the ways Tong describes it. 

“We’re in pretty good shape. It’s not too bad. It’s not been easy. The irony was we rescoped 159 roles and created 174. That wasn’t about making people redundant, it was about more people telling stories. We’ve got a lot of activity around producing a newspaper and the balance of time spent is wrong to where the audience is. Newspapers aren’t bad. I’m not dissing newspapers. People just don’t read them as much. So we need to balance the resources and they have not been balanced. We’ve focused on ourselves rather than on the audience.” 

Recently, there has been some talk of a resurgence in vinyl purchases. That conveniently neglects to mention the fact that while it may be up slightly from last year, it’s down massively from 1973. So while Fairfax is happy to report that it will add more editorial roles, how does that number compare to ten years ago?

Fairfax was unable to provide any specific numbers, but Tong thinks it would’ve had more sub-editing and page layout resource. Even so, he says Boucher’s part of the business is still the largest by a big margin.

“We’re in pretty good shape. It’s not too bad. It’s not been easy. The irony was we rescoped 159 roles and created 174. That wasn’t about making people redundant, it was about more people telling stories. We’ve got a lot of activity around producing a newspaper and the balance of time spent is wrong to where the audience is. Newspapers aren’t bad. I’m not dissing newspapers. People just don’t read them as much. So we need to balance the resources and they have not been balanced. We’ve focused on ourselves rather than on the audience.” 

“So the idea is to look after that. The pressure is in distribution. If you go from 20 copies to 10 you can save some money, but you can’t save it all. You still need a truck to deliver it, you still need to deliver it to two people on the street whereas it may have been four a few years ago. The costs aren’t people oriented.”

Tong says the major growth areas are video, mobile and native and while they’re still small, they’re growing exponentially. Programmatic is also important, but he’s wary of letting too much value go because you’re not paying attention to it.

An example of native advertising on Stuff’s new mobile app, which is set to be released in three to four weeks. 

“The objective is to get our share of that and hopefully ride that as the market grows. You’ve got to play a long game. You can’t turn on a dime. There’s this expectation that what’s taken tens of years to build and in 18 months to two years there’s a new market … You’ll get the same person who loves newspapers demanding that your website updates every five minutes on the floods, so that’s the behaviour we’re dealing with. The challenge is getting the mix right.”

Unlike most newspapers that offer an online version of the newspaper, Fairfax has a central hub stuff.co.nz where all its content flows. So has that strategy been vindicated? Tong points to the recent Nielsen audience numbers to prove that it has and he says it’s very unusual to see a media site sitting that high on the list (if it still owned TradeMe, it would actually be beating Google in terms of total audience). And when those numbers were announced, Boucher made the bold claim that New Zealanders thought of Google for search, Facebook for social and Stuff for content. 

“We’re blessed with Stuff as it’s not tied to a masthead and it allows us to play with a broader range of content. It’s allowed us to be a serious news site through to a less serious site, which, quite frankly, people enjoy. You get this view of serious vs. clickbait and I don’t buy into that. I think you can do both. What we need to do is get the content into the right place. You want to read the stuff that’s important to you and not the rubbish.”

So does the editorial restructure and the hub strategy detract from the power of the masthead and the trust that readers have in it?

He says the journalists are still there and the mastheads are still there, but it’s just a reflection that readers won’t return to that masthead as their only source.

“We’re trying not to denigrate that history. That’s not the point. It still plays an important part.”

And he says this hub approach can be a positive thing for regional reporters. At the MPA conference Tong pointed to North Shore Times reporter Simon Maude who took photos of a woman being rescued from her car that fell off the Birkenhead Wharf (after providing the rock to break the back window). It was on Stuff within 20 minutes and then it went around the world.

He says audience numbers are not the only thing it’s looking at. It’s got sufficiently good analytics to measure audience engagement, although different platforms inspire different behaviour. But it’s unashamedly chasing scale in New Zealand.

“You’ve got to get to a point where you say ‘we’re in the game’. And what do we do from an advertising point of view? … We’re pretty happy. You have to be paranoid as to how your audience feel. How many apps have you deleted from your phone? As soon as you piss someone off, it can happen in an instant.”

I’m in that category. After switching off the app’s push notifications, they just kept coming. So I deleted it and haven’t put it back.

“See what I mean,” Tong says.

Growing an audience is generally a good way to make money, at least in the world of apps and new media platforms. And Tong says “you can’t get away from the fact that we’ve got the audience”.

“If you’re an advertiser in digital today in New Zealand, you should be talking to us, if you’re not, you’re missing out. That’s our view … Digital is the place to be and that’s where we are. We think we have the platform that allows us to be competitive in this market. We don’t expect us to be able to do this alone. Print’s great, digital’s awesome, so I’m encouraging the team to look at it from the customer’s perspective and put deals together and we’ll get what we’re due out of that. If you think about it from a customer POV, what I don’t like is when people will deliberately obstruct an outcome to try and sell something. It will come back and bite you in the backside.”

So as Fairfax battles against the likes of NZME and MediaWorks, which are both backing a converged media strategy, is the fact that Fairfax comes from a history of print journalism a weakness?

“In a perfect world I’d have all of the channels, but you need a realistic view. Sometimes we will be all they need, sometimes we will be part of a schedule, but we should just be good to deal with.”

And at the MPA conference he was very clear about his desire to collaborate with other local media outlets. As he said, in the banking industry, cartel was a good word. In keeping with this goal, Fairfax and NZME decided to share printing facilities last year. And he says it has recently done a deal with MediaWorks.

So does he feel there’s been a bit of dancing on graves with regard to the coverage of the restructure?

“I don’t worry about it too much to be honest. We’re getting on with what we’re doing. You’d be surprised how many people don’t care about media reporting on media. And it makes no sense when the real threats to our existence are on the other side of the globe.”

Recently, The New York Times conducted an experiment and switched off access to the desktop version of the site for staff so they got to experience what it’s like for readers (more than half access the site via mobile). 

Tong says it’s not having to do anything like that. “They’re going there themselves” and mobile (which also makes up 50 percent of its audience), social and video have been major focuses for 12 months.

“Unfortunate weather drives people to mobile and if their experience is good, they tend to stay. Digital is a misnomer. Your behaviour with the phone vs the tablet at home is different.”

“You want to be on the mobile team. You don’t want to be on the desktop team,” he says.

Stuff’s mobile app is the most popular news app in the country, and he says its next version, which is currently in beta mode, will be very visual and socially driven.

So while there are questions about shifting resource from a loyal subscriber base to focus on digital, there are more questions about focusing on social traffic that is notoriously fickle.

“We know there’s a chunk of our audience who are effectively disloyal, and social audience is like that. It’s up to us to prove there’s a reason to stay. It could be content, it could be how fast the site loads, it could be anything. Whether or not we can make a dollar depends on if we’re good enough.”

But those dollars are not likely to come from a paywall.

“I think you only have to look at the moves by Facebook and Apple. The idea of a local paywall in my personal opinion is never going to work. The internet is egalitarian by nature. You’ve got to find other ways to engage the audience and make money.”

As proof of this, he says The Toronto Star has pulled its paywall down and The Sun in the UK is set to do the same.

“Why? Because they’re missing out on audience on sharing across social and they’ve realised it’s impacting their brand. Having audience on its own doesn’t mean you’ve guaranteed success, but at least it gives you options … To be honest, we’re a good news organisation here in New Zealand but as an outsider coming in, I just wouldn’t pay. There are too many ways to not pay for it online. And I think people go out of their way to do that … The maths are difficult if you do the traditional thing and you give a digital sub away with a paper. Some will be tricky enough to get round it, and the rest would go ‘stuff you I’m not coming back’. So we’ve said let’s be as appealing as we can and meet the audience need, get some scale, and then do we have enough people in the area of interest and then find out what they would be willing to pay for.”

He says people keep telling him that it won’t be able to create anything that people will pay for.

“But that’s our challenge with our content and our developments.” 

Stuff has also found success with Stuff Nation, its crowd-sourced content play/membership scheme. It has around 300,000 members and, if the content is good enough, those stories can run on the front page of the site. In fact, a story from Stuff Nation was picked up by the Sydney Morning Herald and run prominently on its website. They were slightly alarmed to find out that it wasn’t written by a journalist. But as the rise of blogging has shown, journalists don’t have dominion on writing. 

As well as experimenting with new ways to tell stories (like Lost Plane or Bodies for Profit) and distribute content (like through WhatsApp) it’s also experimenting with new ways to make money, with an auction platform called Getstuff launched to see whether the audience will buy from it. 

Fairfax Magazines is also part of the portfolio, but, as magazines have been less affected, that division hasn’t been subjected to as much change as the news business.

“You’ve got to be doing what’s right for the region and doing what’s right where Kiwis come together … So, for The Cut, what we try to do with them is say they don’t just play golf, they probably do some other things too. So how about we look at that and see where we can engage them, and what part of the country they live in.”

So what does Tong see happening to the media business ten years from now?

“I think it’s genuinely difficult to predict given what’s going on at the moment. 18 months ago the music streaming industry was seen as a pawn between what was going on between Google and Apple. And news and content feels to me it’s the same way. Apple News, Google News, Facebook Instant Articles, it feels there’s dramatic change to come. The only thing to do is to stick to our knitting and be the ones who are the closest to the community and telling their stories, engaging an audience and someone else’s audience as well, and from there think about what our business model is behind it. There’s an argument to say the media business of the future won’t be an advertising–based model.”

Overseas, some interesting models are popping up, such as Blendle, which aims to be the iTunes of news. And, interestingly, long-form stories tend to perform well. 

He says changing the frequency of newspapers is a question you need to ask paper by paper and community by community.

“You look at the diversity of the Auckland market vs. Wellington and they’re very different. We won’t be afraid to make those decisions when they’re necessary. We don’t focus on the masthead as the be all and end all. That’s the big change here. We focus on the audience that exists within a region or area of interest. There might be a time we say we can’t keep producing this newspaper every day because you’ve abandoned it. It’s happened overseas.”

He says you could paint quite a dark picture about how many New Zealand journalists will be here in ten years. But the crux of its News Rewired programme is to create a wagonwheel around its audience. While some questioned the sale of TradeMe, it was a good return for Fairfax and it paid off some debt. And Tong says it’s also cleared the way to invest more into Stuff, which played second fiddle to its main money-maker.

TradeMe showed that owning a network, rather than physical infrastructure was a good strategy and, with the likes of Airbnb now more valuable than Hilton and big prices paid for the likes of Instagram and WhatsApp, its 22.5 percent investment in Neighbourly, which currently has 135,000 users, is another example of that. 

“Neighbourly is flying along. They connect people up in communities. We’re not selling ads. The sponsors are using it to meet their obligations under corporate social responsibility. We’re really careful with that. It’s a key, the base premise of it is trust and relevance to the community we’re in. It’s a digital version of what our community papers have provided for years: hyperlocal news. What’s happening on your streets. You can ask the neighbour if they know a good plumber. And it’s grown at such a rate shows you that it’s required and wanted.”

He says a suburban Auckland paper with a presence in Neighbourly would logically fit with what the paper is already doing.

“I think the community papers will continue to exist. I think that model is the one that makes the most sense in terms of longevity of stories and hyperlocal. But you need to complement it with a digital option for people who don’t read newspapers. Neighbourly is doing that. That’s why we saw the opportunity. It just works. Stuff on the other hand is a bit of a behemoth so it’s hard to surface those hyperlocal stories for people.”

He says it’s getting better and better as far as personalization via location goes, but he’s always harboured a few concerns over whether it can nail that suburb by suburb stuff.

“That doesn’t mean all the stories would be coming from Fairfax either. Will they be the only stories they’re interested in? I think not.”  

But he says one thing is clear: people will want their stories told. 

“But what’s the model in ten years given what these big behemoths are doing? People who spend time thinking about these things have come to understand that if we don’t pay somewhere along the line, there isn’t going to be any journalism.”

Now we wait for the digital-first philosophy to reach the front desk of its head office in Auckland where, despite being surrounded by digital screens showing the latest headlines from Stuff, you’ve still got to sign in using good old fashioned pen and paper. How quaint. 

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