"Turnover is vanity, profit is sanity, overhead walks on two legs." - Felix Dennis
Is this the Financial Times admitting it's sitting on a burning platform? Or - far less dramatically - an essential reorganising of a venerable news brand that is still reliant on print revenue despite such impressive digital gains?
FT editor Lionel Barber’s email to staff (scroll down to read in full) last night warned of coming voluntary redundancies – with the implied threat of compulsory ones if volunteers aren’t forthcoming – as the business shifts to a “digital first” strategy, every media manager’s favourite phrase to justify difficult cost decisions.
In truth, the FT has been digital first in a news sense for years - at least since around 2008 when I spoke to FT execs about a push into digital publishing for Press Gazette (sadly, not online).
Similarly, The Guardian also renewed its digital first vows in 2011, almost four years after Alan Rusbridger spelled out the digital first future in an interview, with the use of some very web 2.0 blue sky jargon.
So what's new?
After making the journalistic shift from physical to digital – "I blog therefore I am" – now the business models is shifting too. Newspapers are converting their cost structures accordingly. In his memo, Barber spells it out: "we propose to reshape the FT for the digital age."
Barber's eight cost-cutting measures are sensible and, if anything, seem mild. I'd be intrigued to know what some of the FT’s top business commentators would make of any other industry that spent so much (editorial costs) for such little direct return (advertising, copy sales, digital subscriptions) and no guarantee of success.
The FT’s recent ban on all but essential foreign editorial assignments is significant. Why should the CEO of FT Group, he may well be thinking, desperate to keep a lid of costs and reach sustainability, sign off several thousand pounds for an employee to travel across the world to not sell anything, not create a business partnership? Especially when content is often available elsewhere, via news agencies or could have been generated remotely.
This is the cost dilemma being faced by media managers and I don’t think the journalism industry has come up with a suitable answer that justifies the huge spend on people and resources. And there is no doubt this is an act now situation.
Tellingly, Barber also admits what everyone on the business side of national newspapers knows: it can’t afford to ditch printing newspapers.
While the subscriptions to FT.com continue to grow - up to 300,000 as of July 2012, up 31 percent - due in no small part to an expensive investment in good digital products.
But the business’s costs are so large that this immature revenue steam is not enough. While it was the first UK newspaper to a) make more money from subscriptions than ads and b) to see ts digital income overtake print, it's still dependent enough on the ad market for FT Group CEO John Ridding to impose a recruitment freeze due to poor ad trading.
The FT in print still plays a key role in business life across the world and FT Group have consistently said they would like it to stay that way.
Meanwhile, and separately, the FT management must be ruing that proposed legislation to cap the maximum payout from industrial tribunals won’t happen sooner, after an employment tribunal ruled this week that a journalist was unfairly dismissed.
LIONEL BARBER'S EMAIL TO STAFF
In my New Year message, I said 2013 would test our resolve to move further and faster to support top quality journalism in a rapidly changing media landscape.
I now want to set out in detail how we propose to reshape the FT for the digital age. We need to do less in certain areas and more in others, we need to be much more nimble, and we need to reshape our teams.
Today we have started consultations with the NUJ with the aim of opening up an initial voluntary redundancy scheme. The intention is is to reduce the cost of producing the newspaper and give us the flexibility to invest more online.
Our common cause is to secure the FT's future in an increasingly competitive market, where old titles are being routinely disrupted by new entrants such as Google and LinkedIn and Twitter. The FT's brand of accurate, authoritative journalism can thrive, but only if it adapts to the demands of our readers in digital and in print, still a vital source of advertising revenues.
My visit to Silicon Valley last September confirmed the speed of change. Our competitors are harnessing technology to revolutionise the news business through aggregation, personalisation and social media. Mobile alone, for example, now accounts for 25 per cent of all the FT's digital traffic. It would be reckless for us to stand still.
Of course, we must stick to the tested practices of good journalism: deep and original reporting based on multiple sources and a sharp eye for the scoop. But we must also recognise that the internet offers new avenues and platforms for the richer delivery and sharing of information. We are moving from a news business to a networked business.
In order to engage more deeply with our readers, we need to introduce a more intelligent, balanced and efficient deployment of our investment and our people. So we are proposing a shift of some resources from night work to day and from print to digital. This requires an FT-wide initiative to train our journalists to operate to the best of their abilities. And it requires decisive leadership.
I am determined that we do everything we can to secure the FT's future as a world class, financially sustainable news organisation. Our earlier decisions to raise prices, charge for content, and build a subscription business have proven to be bold and wise. While many of our rivals have struggled to find a profitable business model, and have therefore announced heavy job losses, we have been industry pioneers. This is not the moment to falter.
Of course, change is wrenching. I therefore want to assure you that serious consideration and consultation have gone, and will go into the proposals that follow. So too our desire to be fair, honest and transparent. We are now entering into a consultation with the National Union of Journalists and staff to consider the FT's future and these proposals so that we take the right path forward, in a fair and open dialogue.
Let me make several points clear at the outset.
I want to sharpen our commissioning to produce more selective, relevant, high quality content.
I would like to implement measures to simplify the newspaper to lighten the work load and reduce the resources devoted to print. These include:
1. Common ad shapes across editions – reducing unnecessary tweaks and edits between editions.
2. A more common international edition with common fronts and second fronts.
3. A possible move to a common running order between UK and international editions with World at the front of the run
4. Restrictions on the number of changes requested for US second edition.
5. A paring back of the UK 3rd edition.
6. A far more disciplined adherence to copy delivery times, and improved forward planning
7. An end to "octopus commissioning" — we need fewer commissioning channels. Equally, news editors must clearly identify priority stories.
8. Tighter control of pagination We need to ensure that we are serving a digital platform first, and a newspaper second. This is a big cultural shift for the FT that is only likely to be achieved with further structural change.
We must find a way to reduce production resources at night and increase them in the day; these same resources must also be increasingly devoted to the web and less to the newspaper.
On unified news desks, we need to become content editors rather than page editors. We must rethink how we publish our content, when and in what form, whether conventional news, blogs, video or social media.
In our UK and international reporting network, we must seek to have people in the right places ready to devote their talents to covering the big FT stories and not risk becoming isolated in silos or geographies.
Pearson, the FT's parent company, is firmly behind our strategy and our proposed transformation and is providing financial support for the reorganisation we are planning for the first quarter of this year.
The proposed voluntary redundancy programme will help us to reshape structures and reduce our costs by £1.6m in the current year. We estimate this could translate into a net headcount reduction of about 25 people after the introduction of 10 more digital jobs, some of which we are advertising already.
We encourage people wanting to leave the paper to step forward. We will also be consulting with the NUJ as to what further steps we might have to propose if we do not achieve the right level of take-up for the planned VR scheme.
Finally, we will be launching new products and services online in 2013, starting with our "Fast FT" markets and a new Weekend FT app.
This will be an opportunity for all of us to think harder about a more dynamic and inter-active form of FT journalism beyond the printed word. This is vital to drive deeper engagement with readers and build our subscriptions business.
I will be taking part in meetings with team leaders to explain these changes, to listen to your ideas, and answer any questions In the meantime, James Lamont, the managing editor, will supply details of the voluntary redundancy programme and consult widely with you.
Assistant Editors and team leaders will be briefed on the outline of the proposals. They will do their best to answer your questions and offer you their support Throughout the FT's history, we have made great progress in a changing industry. You have taken impressive strides to modernise the FT and I am deeply appreciative of your willingness to adapt to change. This is not an easy transition, but we are obliged to take the difficult steps to secure the FT's future as one of the world's great news organisations.
And with your support in this 125th anniversary year, we can do that and continue to do what we do best: the business of quality journalism.