Roy Johnson’s mother wanted him to be a lawyer, but it wasn’t in the cards: From the start, he was passionate about journalism, and he has worked his way through the ranks of a variety of magazines and newspapers over the past 30 years, mostly covering sports and business. Now at the helm of American Media Inc.’s Men’s Fitness, Johnson is preaching a gospel of diet and exercise to an increasingly obese nation. Here he talks to mediabistro.com about his magazine’s readers, his recent letter to President Obama, and what he thinks of Hearst’s plan for a Kindle-like device for magazines.

Name: Roy Johnson
Position: Editor-in-chief, Men’s Fitness
Hometown: Tulsa, Oklahoma
Birth date: March 19, 1956
Education: B.A. from Stanford University
Resume: Started as a reporter for Sports Illustrated in 1978. Moved on to The New York Times as a sports reporter covering the New Jersey Nets, and then became a sports columnist at the Atlanta Constitution. Returned to SI as a senior editor, overseeing college basketball, tennis and golf at various times. Briefly worked at Money before moving over to Fortune as an editor-at-large. Left Fortune to join Vanguard Media as the founding editor of Savoy. Returned to SI as an assistant managing editor in 2003, but then was laid off at the end of 2005. Joined Men’s Fitness as a consultant to CEO David Pecker, and then was given the title of editor-in-chief in May 2007.
Marital Status: Married
First section of the Sunday Times: Front section
Favorite TV show: ER
Guilty pleasure: Golf

Tell me a little about how you got started in media.

I started out as editor of my junior high paper, and while I was encouraged to pursue something other than journalism (and majored in political science at Stanford because I was going to be an attorney), I actually ended up in the profession that was most at my core.

When I left college, I was torn between law school and starting to work. Torn, in part, because my mom wanted me to go to law school. And so I applied to some schools, but I said, “Let me get a job, I can always go back to school.” I ended up with two job offers out of college. One was to become a local reporter at the Tulsa Daily World, where I would have been the first black reporter at the paper. The other offer was to become a reporter at Sports Illustrated. That decision literally took seconds to make, and I ended up coming to New York to work for SI. My mother was disappointed, but she got over it.

While you have worked at a couple of business magazines, for most of your career you’ve been writing about sports. Men’s Fitness is focused much more on service pieces about health and conditioning. How was that transition for you?
It’s actually been an easy transition, but it’s a natural transition. Having been around people who essentially earn a living with their bodies has proven to be a great resource for keeping our readers ahead of the curve when it comes to fitness and nutrition trends… My background has really helped because I not only had relationships in the sports industry and sports world, but really had an insight into what is required for these guys to perform the way they do.

Do you see the magazine as a venue to help people who are obese, or is it more for guys who are already in shape and seeking to up their game?
Ideally, if a guy wants to get in shape, he can pick us up and find something that helps him get his foot in the door to take that first step toward living a healthy lifestyle. Most of our readers have already embraced it to some degree, and are looking to elevate their game, to get in better shape, to get stronger, to build more stamina, to learn what they should do to enhance their workouts. So with most of the guys who are picking us up, it’s not the first time they’re going in to the gym. But we have a broad spectrum of readers.

In February, you addressed your editor’s letter directly to President Obama. What was behind that?
I thought this was an opportunity, with a new president coming in under the banner of change, to put something that I feel is very important in front of him as he tackles the various challenges that the nation is facing — certainly there could be no greater challenge than getting America back in shape. I didn’t write it lightly because I feel that fitness has an impact on our society, and certainly there are costs related to healthcare when we are not in good condition, and there are costs related to work efficiency, and costs relative toward our own feeling about ourselves… So I encouraged him to look at this and develop an agenda that would get America back on track, including a revival of the President’s Council on Physical Fitness with a mandate to begin educating people in the ways they can get in better condition and start eating better; to look at what we are giving our kids in our schools and try and pull some of the trans fats out of cafeterias; and to look at reviving sports programs in our schools.

So you see yourself in an advocacy role as the editor of a fitness magazine?
No question about it. I feel like I and my staff are ambassadors of living a fit and healthy lifestyle, and imparting the benefits of investing in yourself to the reader. I think there’s a clear mandate and opportunity to say, ‘We’re giving you something to help you live a better life.’

Is that a requirement of staffers? Do people on your team have to get in shape?
It certainly helps to be living the life that you speak of. Not everyone here looks like our fitness models, but I think we have a pretty good group of people who not only talk the talk, but also walk the walk — in their own way.

How does online play into the magazine’s plans, and are you doing anything with other platforms?
I tell our staff that we’re not a magazine staff, we’re a brand staff. And our aim is to create content and distribute it to readers however they want it — either through the Web site, or through their iPhones, or whatever medium they happen to be using. Ideally, we’d like to be able to have people take us to the gym, either on their iPod as audio or video workouts, or any of those things.

Hearst recently announced that they are planning to come out with a Kindle-like E-reader for magazines. What do you think of the idea, and do you think that the model of Kindle can work for magazines?
I’m intrigued by Kindle. I think for magazines it depends on the content. Just as how the experience of reading Men’s Fitness is different from getting the same information on the Web, we distribute it both ways because each individual might want the information in a different way at a different time. I think there will always be users who love that experience of reading a magazine and touching a physical magazine — and there will be people who immediately migrate to another medium. For those, the content is what drives them, and so the ability to get the content easily is more important than touching the paper. I want to get all of them.

American Media Inc., your parent company, barely avoided bankruptcy a few months ago after restructuring its debt. Has that affected Men’s Fitness at all, and do you anticipate problems in the future from it?
I don’t think there’s a media company in existence that hasn’t been affected by the turmoil of the economy — whether there have been layoffs and restructurings or not. Most companies have had some sort of action like that. It’s unfortunate and the industry is certainly undergoing seismic change. Some of it may have been necessary, and it’s unfortunate when you see your colleagues leave, and see how it sometimes affects the people who remain behind. But we’re a resilient industry and we’re a resilient company. Morale is getting back to itself again. People still believe in what we do and believe in the products we’re creating. And as long as we’re doing that and feel like the market is responding, we’ll be fine.

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.

When Vibe closed down in June of this year, it was the end of an era for the iconic urban music and culture magazine. Following the closing, founder Quincy Jones said “They messed my magazine all up,” and vowed to relaunch it with a focus on online. But it was Uptown Media — the company co-founded by another Vibe veteran, Leonard Burnett — that bought the title in August with plans to resurrect Vibe‘s unique perspective both online and off. With the mag’s first new issue set to drop on December 8th, mediabistro.com met with Burnett recently in Uptown Media’s Harlem offices to talk about his career, how the new incarnation of Vibe will be different, and the future of magazines online.

Name: Leonard Burnett
Position: Co-CEO and group publisher, Uptown Media Group. Vice President and group publisher, Vibe Media Group
Birthdate: April 18, 1964
Hometown: Detroit
Education: B.A. from Florida A&M
Resume: Launched Urban Profile magazine with friend Keith Clinkscales in 1987. Sold the publication to Career Communications Group five years later and joined Vibe ahead of its launch. Left in 1999 to found Vanguard Media, which went out of business a few years later. Started Uptown Media in 2004. Went back to work at Vibe in 2005, and then finally bowed out in 2007 to work on Uptown full-time.
Marital status: Married with two children.
Favorite TV show: Sportscenter or Countdown With Keith Olbermann.
First section of the Sunday Times: Business
Last book read: The Family by Jeff Sharlet.
Guilty pleasure: Golf

Tell me a little about how you got started and how it led to where you are today.

Well, I got out of college and knew I wanted to be an entrepreneur — my family was in franchising, so I thought about doing that. For a while, I was working for a company called Baxter Healthcare, in sales.
Then I moved to New York with a buddy of mine, Keith Clinkscales. We started a magazine called Urban Profile.

It was around the time of the Tawana Brawley case and Bernard Goetz, and a lot of information on the news didn’t really sew in a perspective of African-Americans, and we didn’t necessarily agree with it, per se. So whenever something bad happened and they spoke to certain people, they either didn’t articulate it from our perspective — or it just wasn’t representative of young, college-educated African-Americans. So it was a magazine about social and political issues from the young, black perspective. There was a movement at the time of “yuppies” and “buppies” — the guys who didn’t care about the community and were just working up the corporate ladder — and we felt there was a betweener; people who were definitely working toward becoming urban professionals, but who were also looking for a connection to their community and wanted to see things that were positive and uplifting.

That lasted about five years. Then we sold the company — sold the debt — to a company called Career Communications Group. We were there another year or so working for them, but then we saw the first test issue of Vibe, and there was more edge in that issue than in our whole career up until then. And a little while later we got a call from Time Inc. asking if we were interested in coming up to New York to launch this new magazine. And we were.

I left there in ’99 to start a company called Vanguard Media, which then came to own Honey, Heart and Soul, Savoy, and the Impact Music Conference. This was during the dot-com era, and we raised private equity money, and eventually we sort of ran out of runway.

In 2004, we started Uptown. We’re magazine junkies.
Brett [Wright] and I both lived in Harlem, and had always talked about doing a magazine, originally to service this new renaissance of Harlem. And then we realized that there was an opportunity not just for New York but to expand it and use the Niche Media model and the Modern Luxury model to roll out these regional titles that are luxury and affluent for this underserved market. So we’re a national magazine with regional editions in New York, Chicago, Atlanta, D.C. and Charlotte — they’ve got local content surrounded by mostly national content. They each have about 30,000 copies per market. I went back to Vibe in 2005, then left in 2007 after Brett and I raised money to do [Uptown] full-time.

Now that you’ve got Vibe in the fold, will the two magazines share content at all?

Not on the print side, I don’t think. What we’re going to find and do on the digital side I think is share resources — across the board. From a content perspective, sharing would not be the right word, but if there’s a story on healthcare, or a story about what Kanye [West] did, the certainly there is a tempo and a tune to it that would speak more to the Vibe audience. And there’s a different tonality that would come from the Uptown perspective.

Given this special experience of print, how do you think magazine content (the big pictures and longer articles, et cetera.) then translates online?

I think you have to adapt and adjust it. I think one of the things that [The Audit Bureau of Circulations] is struggling with is this idea of having digital sub-copies, and putting regulations on how your magazine has to look as a digital piece — that it has to look enough like the print edition to be considered. But that’s not the way a consumer wants to look at their digital read. So maybe it’s not going to have all the beautiful pictures — which is what makes print so special — but the way you get the content and the things that you can do to bring that 360 [degree element] to the content with video and links and music and B-roll will make that relationship with the magazine online become a special moment.

Where do you think the past incarnation of Vibe went wrong, and what’s going to be different this time around?

It was really a perfect storm. I think that over the years, there was a lack of investment into the brand itself, specifically on the digital side and on the brand outside just the print vehicle. Vibe‘s revenue was 90-some-odd percent from print. And during the years when it was making an awful lot of money, there was never any true investment into building out these other areas. And then fast-forward into the early 2000’s when they’re making less money and they’re still not investing in [online] and still not really figuring out ways to adjust to what was then a lot of digital opportunities.

Then the advertising environment just really propelled a bad situation to become even worse. Vibe thrived off of urban fashion, music, and automotive — and then when you go into ’05, ’06, and ’07 [the advertising] just kept deteriorating. First it was a shift over to digital [for advertisers] and then when the dollars started to even back out, the dollars that you are counting on for the print side in certain categories just started to evaporate at a much faster rate than we were able to break new categories.

The book also didn’t lend itself [to these new categories]. [Vibe‘s] aesthetic perspective and editorial focus [originally spoke] to a very broad and important perspective of what urban music and culture meant (which really wasn’t just rap, but R&B, reggae, and gospel, and anything you can move and dance to — and even where the consumer was going with the blending of Jay-Z and Coldplay, and this sort of rap and alternative rock). We went from being the kind of Rolling Stone of urban culture to competing with The Source and XXL. These are great books, but… Rolling Stone is really the music and culture magazine that has stood the test of time — and when you look at the breadth of what they have with the core of it being rock ‘n roll, mixing the old with the new and the influx of urban, and the political scene, the fashion scene.

So now, from an editorial perspective, we are going back to an editorial discussion that was much broader than it was. It has a lot better visuals. We’re going back to great photography, which was always such a big component of the editorial product. The book will be much more visual and have a better quality of paper. The consumer should look up to Vibe — Vibe is showing them something that they don’t know about, and give them something to aspire to. Not like Uptown, but something new and on the cutting edge.

Is the digital product going to be all original content? Are you going to be doing some aggregation?

It’s a combination of both. There is going to be a distinct, clear editorial voice and perspective of Vibe, but at the end of the day coming out with something new on digital is tough to do. What we want to say is, ‘You are a Vibe reader? What are your interests? Fashion, culture, politics, music.’ We want to be the place you come to that has aggregated all of this stuff — a product with a distinct voice about it, but also a one-stop shop where you can find the information online from your own Vibe perspective. So it’ll be a combination of blogs, aggregated content, video, social media, iPhone. In digital today, you’ve got to have a vision — you want to know where you want to go, and you want to be able to adapt and adjust to the digital things that are coming on every day. You don’t want to just hang your hat on Twitter or Facebook; we’re going to have all that stuff, but there’s going to be new stuff that comes along the way. Our motto is going to be that we want to be able to try anything that we think is going to be useful to us as a social media opportunity. We want to measure it quickly and see if it works (its ability to drive traffic and engage the consumer), and if it doesn’t work, then get off of it. We’re not even in the radio era of digital, and it’s going to change. And so you want to build upon a platform that’s agile enough to adjust and test and try, and invest in what works. The idea is to allow the consumer to be part of that process.

While keeping the Vibe brand, you did bring in a new top editor. Was that a conscious break with the past?

I think Danyel [Smith], who had been part of the team that was part of the first test issue and had been with Vibe for most of its years, did a great job in a tough environment. But I do believe that there is a need to have a voice from a different perspective that also has some digital experience, while still having some of the past successes of Vibe and being a part of it. [New editor Jermaine Hall] was an intern back in the day, and — while you don’t want to rest on your laurels and say, ‘We want Vibe to be like it used to be,’ — there’s a respect and there’s some institutional knowledge that you can take from the past into your new vision and the new way of thinking for the brand.

The idea of paid subscriptions and paid content has made a big comeback lately. What do you think of charging for online content, and do you think that would work with Uptown Media’s properties?

I think once you let the horse out of the gate, to bring that back is tough. I don’t think the idea of paying for content in its standard form is anything that’s going to happen. But what can you provide extra that someone is willing to pay a nominal fee for? ESPN has done some interesting things in having ESPN Insider where you get digital access, but then included in that is a subscription to the magazine.

What can we do from a digital perspective to allow a consumer to get information that they want and will want to pay for? We’re still in the Dark Ages of this, so I think as new technology comes out and new ways to use technology comes out, I think you’ll find new ways to ask to pay for access to stuff. I think there are ways to monetize certain kinds of e-commerce from big and small brands — where you see what’s in the magazine and see what’s online and have people purchase it and get a commission there. If you’re reaching millions of consumers, how can you produce something, such as Uptown-branded stuff, that people will want?

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.

Larry Kramer didn’t intend to be a media entrepreneur: Growing up, all he wanted to be was an investigative reporter and editor, breaking Watergate-like stories from the side of business. But after following this path through Harvard Business School, and into stints as a reporter, editor, managing editor, and editor-in-chief of some of the most highly respected newspapers in the country, he saw an opportunity and he took it. The result was Marketwatch, an online news service that he helmed for 14 years before it was sold to Dow Jones for more than $500 million in 2005. Kramer will be moderating a panel entitled “New Business Models for Media” on Wednesday, June 3, at Mediabistro Circus. Here he talks to mediabistro.com about which models for monetization look the most promising, and how a young journalist might break into the industry in this age of media upheaval.

Name: Larry Kramer
Position: Senior adviser, Polaris Venture Partners
Birthdate: April 24, 1950
Hometown: Hackensack, N.J.
Education: Syracuse University (journalism) undergrad, Harvard Business School
Resume: Reporter and editor in various positions at the San Francisco Examiner and The Washington Post; Editor-in-chief of the Trenton Times; managing editor, Metro, of The Washington Post; editor-in-chief of the San Francisco Examiner; founder of Marketwatch; advisor to CBS Digital and others. Currently writes for The Daily Beast and serves on the boards of seven different companies and institutions, including Discovery Media and The S.I. Newhouse School of Public Communications at Syracuse University.
Marital status: Married
Favorite TV show: House
First section of the Sunday Times: Sports or business, depending on the season.
Last book read: Boom! by Tom Brokaw
Guilty pleasure: Playing golf.

You’ve been involved in thinking about models of online content monetization for a while. What do you think are the most promising ideas out there, and how do you think publications are going to make money in the future?

I think that what the Web allows — and what we should therefore offer — is alternatives. Look at entertainment TV: you can watch shows on TV and you can look at the ads, or you can go to iTunes and pay for it and watch it with no ads, or you can get it some other way. And so I think we should have every option open to people. I think whether or not people will pay for content (or how many will) depends on a lot of things, including the economy. But the Web is wonderful in that it allows for multiple business models. It has to be about multiple revenue streams — you’ve got to have that to avoid tragedy, and to avoid what’s happening now to companies that are entirely ad-based.

So you think advertising is done as a business model for the time being?
Absolutely not. We’re in a downturn, but advertising will come back. People have to sell things, and companies need to market their products — and they will. There’s no question that there are new ways to do that — and for some advertisers, something like [Google’s] AdSense might be the most efficient way to do that no matter what happens. But there still are multiple kinds of advertising that will need homes, and they generally reside around where people are spending all of their time. If you’re trying to sell people something they don’t know they want, then you have to go wherever they are. And people are on the Web… We have a huge open area as to what people are going to watch and how they are going to get that content. So advertising will find a way to be involved in that — it has to. It’s in its infancy now; they don’t know how to measure it.

One of the great things about the Web is that it’s an enormously accountable medium. If we sold a million newspapers, you can’t know how many people saw your ad on page B22 — yet the medium can charge you for the million they were printing. On the Web, you don’t get ad money paid to you unless people go to the page it’s on.

Magazine editors love controlling the look and feel of what you see. That’s a big part of what a magazine is; the way things look and the quality and the size. They all make a difference to you as a consumer. In the Internet world, the consumer controls that — how big a screen he has, what he’s looking at, what he chooses to look at. You have to adapt to that — both as someone who is giving them information, or something for purposes of entertainment, or selling something.

And so the storytelling process is being reinvented; it’s just totally at a new moment. We don’t yet have that generation of digital storytellers who are integrating all forms of media on one platform… The real future is total integration. When someone is telling a story they use video when they should, use text when they should, use pictures when they should, and use interactive graphics when they should. And it’s a single, seamless process. And we don’t even have that down as a medium yet, so how can the advertisers have it down?

The theme of the Mediabistro Circus this year is “Doing More With Less.” Which companies do you think are doing the best at this point in economizing?
For media companies, doing “more with less” means that, in all likelihood, a good number of the revenue streams which supported you are gone. Newspapers and newsgathering were supported by, among other things, classified ads, and that was purely because of the medium. Because the only way to get those ads into every house was to have them delivered there in a newspaper — because a newspaper went to every house. It had nothing to do with the news, but the news operation was supported by it. Now there’s a more efficient way to do it, so there’s the end of that revenue stream.

As a media company, you assume you have less revenue and it has to be made up to some extent. But it also means that you need to figure out how to more efficiently deliver the message that you have to deliver. And on top of that, because the public can now go to any news source, one of your key roles is no longer going to be filtering everything the way it used to be. But the fact is, you still have to filter it, but you are filtering more of a finished product.

In the old days, press releases went to the press, and you didn’t get coverage unless they gave it to you. Today, people issue press releases and they show up in a hundred places, whether any news chooses to pick it up or not. But if you’re the consumer of that press release, you might not know how important that news is — you’re not getting anyone’s advice. So the journalist’s role as the curator of the “long tail” is the new part of what they have to do. It means that instead of ignoring the fact that everything is now available to the public, they’ve got to take advantage of that and help the public figure out which of the 20 blogs out of the 10 million on a subject they care about matter — or are giving you an intelligent offering. Part of the journalist’s role will be to help link you, the reader, to the best and the brightest information. And there you don’t need armies of reporters to necessarily cover everything yourself. The public has said very clearly in some places, “We care about the wisdom of the mob.” We care about what 1,000 people think is the best hotel in Belgrade — not necessarily a paid journalist who’s out there reviewing it, or the marketing efforts of a company that owns it.

As journalists you have to use that information and use everything that’s out there publicly, and organize that for your readers. And, in a lot of ways, that’s different from investigative reporting — which you still have to do by the way. It’s less important for you to write a piece saying, “Here are the best hotels in Belgrade,” and it’s more important — instead of paying $100,000 a year to a great travel editor — to pay some people less who are basically moderators or curators, to take what’s available and use the wisdom of your position to select as opposed to do it again.

If you’re The Boston Globe‘s foreign editor, your value may not be anymore in hiring a reporter in every city in the world, but in telling your readers who’s got the best coverage that matters to them and delivering it to them.

But as there are fewer and fewer newspapers producing this kind of content, isn’t there less and less content for news organizations to aggregate?
Yes, there are right now. But here’s how the model changes in my book: Ten years from now, we don’t have TV newsrooms, newspaper newsrooms, radio newsrooms — we just have newsrooms. And the newsrooms are built around what they’re covering, not how they’re delivering it. So you get a Washington newsroom that is covering D.C., and it’s covering the federal government. And instead of it being a newspaper or a TV station or a network or whatever, its job is just to cover Washington, and it has journalists everywhere there. And its job is to distribute content on every platform from there. It could be sports, it could be finance… These could be geographical or whatever. It’s just subject matter coverage… It doesn’t mean that every reporter has to have a camera and do video. It just means that you have to understand what part of that story is best told in video and be able to tell it.

There will ultimately not be one news organization covering each place of topic — there will probably be a couple or more. To make an analogy, it was once this way for wire services. There was AP, UPI, Reuters, Agence France Press — all these alternatives that would give you some coverage of London or Moscow or Washington. This is not to say that The Boston Globe shouldn’t have a reporter in Washington — there is a Massachusetts delegation, and there are issues that are related to Boston there that they should be covering. But why do they have to have a reporter covering the White House? Why not have the equivalent of one or two wire services covering the White House — only instead of wire services, they’re news services and they cover it for everybody.

Because these platforms are merging… why not just do them once? The smartest way to do this is to divide it up not by medium, but by what it is that they’re covering.

As a guy who started out wanting to be a newspaper man during the Watergate period, how do you feel about the fact that the old-style culture of journalism has been lost in these changes?
I think it was lost way before all this happened. Everybody I knew who was a reporter back then wanted to change the world. But the industry got much more “professional” over the last couple decades. That’s not necessarily a bad thing. We’re training good journalists, we’re doing all the right things. But I think that what they’ve lost is a lot of the passion that drove us. There are great journalists now — don’t get me wrong, and it’s fun to find them and see them do their thing, but it was more prevalent then. There were fewer people who really cared that much about how much they made, and that led to a situation where media people really aren’t paid that much — unless they’re really big. There’s a really big chasm between the average reporter and a superstar. The danger of that had already happened. But one of the nice things about the Web is that it’s bringing back a lot of the people who have passion, because they don’t have to get a job at The Washington Post to go and be an investigative reporter.

What would be your advice for someone who is starting out now — say a 23-year-old college grad who is thinking about J-school?
The difference now is that [young journalists] don’t have to go to Grand Forks [North Dakota] for three years to become anchor. They’re going to where they want to live because, like everyone in the world these days, they’re more used to getting things the way they want it.

I don’t think people have to go to strange places or small towns [to get started as journalists]. There’s nothing wrong with it — small towns need coverage too. But the fact of the matter is, if you’re a good statistician, you should go to Washington and work with one of the investigative groups that are using stats to break stories… Or if you love business reporting, work for any of a number of Web sites that cover business. One of the traditional ways in, too, was always through trade publications, and there are more and more of those with the Web. Niche publications are great.

We still don’t have yet a whole generation of storytellers on these new platforms. Platforms are changing so much that nobody’s got a head start on you if you’re a kid. If you have the heart and soul and you’re interested in covering something, you can go to any one of these new media places and in three weeks be as knowledgeable and up to date as everybody there — including what tools are available and how to tell stories — because they changed last week anyway. I think it’s a wonderful time, and it’s a great time to reinvent what we do. But at the core of it — are ethical standards, are issues of fairness.

Do you think that ultimately the big media companies are on the way out?
I think the big media companies right now are in bunker mentality. They’re getting so slammed on revenues, that it’s not about where they are now or where they’ll be in 10 years, it’s about the transition. And taking the transition, particularly if you’re a public company, is brutal right now — because you have to recondition your company (including all of the shareholders) that this is going to be a very different company. It’s not going to be nearly as big.

Everybody has to reset what defines success [for a large media company]. And that’s almost impossible to do.

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.

At a time when many magazines are seeing advertising declines of 30 percent or more, aggregating newsweekly The Week has actually seen ads increase by 19 percent in the first quarter of 2009. Circulation has also grown steadily, with the magazine gaining readers in the past 10 consecutive ABC periods for a total increase of 170 percent over the past six years. We spoke with The Week‘s editor-in-chief Bill Falk about the magazine’s distinct voice, how it aggregates and condenses news, and what about its business model is helping it weather the recession with relative ease.

Name: Bill Falk
Position: Editor-in-chief of The Week
Birthdate: November 23, 1954
Hometown: Brooklyn, N.Y.
Marital status: Married with two daughters.
Education: New York University
Resume: After college, worked as a copy editor and news reporter for Gannett’s Westchester Rockland Newspaper Group, and eventually became a Sunday magazine writer and news columnist for the chain. Moved on to Newsday, where he worked as a reporter writing long-form features and was part of two Pulitzer Prize-winning projects. Returned to Gannett as an editor heading up the projects teams at the Journal News (which was created in the 1998 merging of newspapers from the Westchester Rockland Newspaper Group), and then became deputy managing editor in charge of the news department. Was named editor-in-chief of The Week ahead of the magazine’s 2001 launch.
Favorite TV show: Cable news and Mets games.
First section of the Sunday Times: The A section and Week in Review.
Last book read: So Brave, Young, and Handsome by Leif Enger
Guilty pleasure: “Kayaking by myself without access to phones or email or newspapers.”

What’s your system for picking stories to condense? Does most of your content come from people scanning for and finding print articles or from searching online?
Our process is that we’re all reading print and online all the time, and we’re constantly making notes and clipping stuff out. We sort of get a sense of what the big stories are, and we have a couple of meetings where we decide [which ones to choose]. And then we have a researcher who basically pulls everything that’s been written on them, using LexisNexis. But we’re online all day long and we’re printing stuff, so it’s a combination.

It’s surprisingly difficult to [create the magazine each week]. It looks very easy, but the art is in making it look easy. I’ve found it very hard to find journalists who can do this work. In order to hire the original 15 people [at launch], I had to interview and do writing tests with something like 150 people. You’re doing several things at once — it’s the compression without losing clarity and readability, and then managing to take four or five opinions and putting them all into one coherent essay that reads smoothly. It’s surprisingly difficult, and it’s a knack that some people have and others can’t handle. Plus, there’s a really distinct voice that the magazine has, the way the old Time and Newsweek used to all read like just one person had written it — we’re very much that way. We have no bylines. Time and Newsweek used to achieve that by having five or six levels of rewrites until it all kind of came out as a homogenized form, but we only really have one level of edit and then a copy editor, so people that work here really have to have that voice in their head.

While there’s the distinct voice, though, you don’t have a political bent or really comment on the news.
No. It’s a sensibility and it’s certainly a writing style. It’s very succinct, lively, and sometimes witty. It has a sort of British feel in the sense that Brits do a sort of deadpan irony — and all the humor in The Week is like that. We don’t do gags, or Spy magazine-type humor. I often describe the magazine’s humor as a kind of “twinkle in the eye”; it’s subtle and understated; it’s being bemused by the world.

We don’t really ever comment on what anybody says. The Week doesn’t speak directly to the readers. It’s our filtering; what we’ve chosen. Sometimes a writer will come — when it’s a subject that has been dominating the commentary — with a manila folder that has 100 or more printouts. So part of what we’re doing is winnowing it down to maybe six or eight that we think represent the best arguments along the spectrum and getting them to work together. Part of the art is figuring out which of the pieces can be made to cohere so that the argument has a line that goes through it. So we’re looking for balance, and our value-add is that we’re reading all this stuff for you so you don’t have to, and we’re helping you make sense of it.

Is it more important not to miss the big stuff, like a major Times story? Or is the value of the magazine in highlighting articles from obscure publications that people would never find on their own?
I think we do two things, really. Part of it is that we do the big stories. If there’s a huge debate going on about Dick Cheney and torture, we’re definitely going to do it. We’re sort of like a buzz-meter. I will read the op-ed and editorial pages of every major newspaper every day, and if we suddenly realize, “Wow, this is the ninth piece I’ve seen on this same subject,” then we have critical mass. But we also look for the little, quirky, fun things. We look all over the world for stories that you’d want to turn to a friend and say, “Hey, have you heard about this?”

News aggregation, generally, has become a major topic online, and Google News gets a lot of flak from newspapers, particularly, for taking their content and putting advertising against it. Do you all skirt that by the rewriting? Do news sources ever object to your summarizing their pieces?
We haven’t had that kind of problem. Google News doesn’t do any value-add — they just take other people’s material and put it on there verbatim. I think people in the industry look at the magazine and understand there’s a lot of work that goes into it. We are taking stuff that they’ve reported and attributing it to them, but we’re also adding a lot to it. In fact, a lot of people send us their magazines and want to be quoted.

The Week has continued to grow recently even while other magazines, and newsweeklies in particular, have been losing readers and making cuts. What are you doing differently?
A couple of things are going on there. Our business model is really more the business model that Time and Newsweek are now adopting. We get half of our revenue from subscribers and half from advertising, so we are less advertising-dependent than some of the other magazines, which, essentially, gave their magazines away. They charged, in the old days, $10 or $12 for a subscription, and were just trying to make big numbers so that they could sell advertising against that. That left them very vulnerable to advertising downturns like we’re experiencing now. Now they’re all trying to get their subscription price up and have more “quality” readers.

We’ve always had a fairly high subscription price. We ask $49 per year now, but for that we know our readers are very engaged — they’re sort of cult-like in their attachment to the magazine. … And right now our biggest sales force really [is] the readers; we got over 200,000 gift subscriptions last year. Part of the success of the magazine is that — because The Week isn’t a big, huge, visible brand like Time or Newsweek or things like that — they feel a sense of ownership.

It’s also a very lean and mean operation. While other publications have 200, 300 or 400 editorial employees are finding they can’t support that anymore, this business model is 15 full-time people and a couple of contributing editors. We don’t have this huge overhead cost that some of these other magazines have.

Felix Dennis, The Week‘s owner, sold all of his other U.S. magazines a couple of years ago, but held onto this one. Does he have a special investment or involvement in it?
Yes, he does. In fact it’s one of the major reasons I came to work for him in the beginning. He convinced me that this magazine was really near and dear to his heart, and it really is. He has said that he sees The Week as one of his legacies to the world, and he really wants to grow it out into a global brand.

What are your plans online, and how does The Week‘s concept translate?
We just announced that we’ve hired Maer Roshan to head the Web site, so we’re really going to put a lot of effort into that because we want to be as strong on the Web as we are in print. The concept does tailor to the Web — it’s kind of a quick take, rather than the end of the week where we have a chance to really digest everything. With the Web, it’s, “Here’s today’s buzz.” And I think we’ll adapt our filtering function to other media, like video. And on the Web, we’ve added some original content. This year will really be a big push online for us.

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.

Today, the New York Times introduces TimesSelect, a subscription-only online package that includes access to certain New York Times columnists and web-based add-on features. mb’s David Hirschman talks to Diane McNulty, Group Director of Community Affairs and Media Relations about TimesSelect:

Why has it taken so long for the Times to start charging for content? Why start now? Are there any plans to eventually make the entire paper “select,” like the Wall Street Journal does?

The New York Times on the Web always has had some paid sections, including the crossword puzzle, News Tracker, and our archives. In fact, when we first launched, users overseas were required to pay a fee for access. TimesSelect represents the next phase in the evolution of our digital strategy. It creates for our readers exceptional value through access to The Times’s vast archives, something our readers have long requested, exclusive online access to the distinctive voices of our Op-Ed, Business, Sports and Metro columnists, new organizational tools, early notification of news and features. TimesSelect brings readers closer to the journalists and journalism of The New York Times. In a changed (and changing) media environment, TimesSelect will provide a new source of revenue that will enable us to continue to provide the brand of quality journalism our readers have come to expect. Ninety-seven percent of NYTimes.com will remain freely accessible. We have no plans to change that. And, again, New York Times home delivery subscribers can register for TimesSelect for free.

Once people have paid for the articles within TimesSelect, will links be available for use by bloggers? Are these articles (the opinions specifically) being taken behind the pay-for curtain in order to keep blogs from linking to them?

The annual fee of $49.95., or monthly fee of $7.95, will give subscribers free run of the site. Members will have access to the above mentioned columns of The Times and the International Herald Tribune, free access to 100 articles per month from the newspaper’s archives ultimately dating back to 1851, new organizational tools and early notification of upcoming articles. TimesSelect subscribers can create or view hyperlinks to the full text of the columns. Non-subscribers will see a brief summary of the column. We expect to have an affiliate program in place by the end of the year that will provide incentives for bloggers and others who generate new subscriptions via a TimesSelect advertising link on their site.

Regarding the affiliate program there are two key points. One, the links in the affiliate program will be clearly marked as advertisements—they will be a combination of text links and banner ads on a blogger’s site. Two, It is not our intention to have the bloggers use RSS feeds or to discuss our content as a way to promote the TimesSelect affiliate program.

With all of the free content available on the internet, why should readers pay for Times content; won’t readers simply find another outlet for the same kinds of opinions? If Maureen Dowd costs $1 (or a subscription), and some smart blogger with a similar bent costs nothing, why should readers pay?

For more than 150 years, The New York Times has offered its readers quality journalism. A strong part of our editorial offering has and will continue to be our columnists who are some of the most influential voices writing today. We think our readers will want to benefit from the insightful contributions our columnists make to the public discourse on the issues of the day.

David S. Hirschman is the news editor of mediabistro.com.

Quick Question Follow-up: Would you pay for TimesSelect? Why or why not? Send your responses to letters@mediabistro.com, and find out on Wednesday what readers are saying.

When advertising bottomed out in 2009 and the future of media was anything but certain, the venerable Christian Science Monitor was faced with a difficult decision: either change the publication’s business model or continue to watch its revenue erode. Betting that they could better use scarce resources to build up the paper’s online presence, the Monitor decided to kill its century-old daily print edition in favor of a weekly magazine that focused more on features and analysis than news.

Today, with the one-year anniversary of that strategy (and lessons learned) in his rearview, editor John Yemma says the brand is better for it. “People have already read stories about the ‘who, what, when, where,’ and they want to get to the ‘why,'” he says. “For print it really works because we have a unique news position. And on the Web it seems to resonate as well — we’ve more than doubled our traffic.” Checkmate.

Name: John Yemma
Position: Editor of The Christian Science Monitor
Birthdate: November 18, 1952
Hometown: Austin, Texas
Education: B.A., University of Texas
Resume: Worked for several newspapers in Texas before becoming city hall reporter for the San Antonio Express-News. Went on to work at United Press International’s Dallas bureau in 1974 and then joined the Dallas Morning News in 1976. Moved to Washington in 1979 and got a job with the Christian Science Monitor‘s D.C. bureau. Became a foreign correspondent for the Monitor in the Middle East from 1980-1983 (working out of Beirut and then Cyprus). Returned to the U.S. in 1984 to briefly serve as the Monitor‘s New York bureau chief, and then moved to Boston to become the paper’s business editor. Moved up through several of the paper’s editorial positions until 1989, when he jumped to The Boston Globe. Spent 20 years at the Globe in various top positions as a writer and editor. Became editor of the Monitor in 2008.
Marital status: Married
First section of the Sunday New York Times: “The A-section. I’m a news guy.”
Favorite TV show: The Office, SNL, The Daily Show, and The Colbert Report.
Last book read: Love in the Time of Cholera by Gabriel Garcia Marquez
Guilty pleasure: Mexican food. “I will travel miles for good Mexican food.”

The Monitor‘s decision to go online-only last year was seen by many as a major step in the evolution of newspapers. What was the genesis of that decision?
For about two years before they hired me, [the paper] had been involved in a fairly deep-dive [analysis] into the future of print. They looked at their financials, they looked at the future of print, they did prototyping of a weekly in two different forms — a slick weekly and a tabloid weekly — and they’d already made a lot of progress along the lines of moving from daily print to weekly print. It seemed like where they weren’t making much progress, and where they were still caught in the old paradigm was “What do we do with print? How do we make it most effective?” — when what we really needed to do was go Web-first. Print should be there, but it shouldn’t be the lead dog on the dogsled.

Even though print still makes the bulk of the money?
In fact, that’s true of the moment. And it’s certainly true with most newspapers. But it’s clear that the future is digital. That doesn’t mean that you won’t have print. It just means that you either lower the frequency of print — which is what we did — or you do what the Globe and the Houston Chronicle and others have done, which is to decrease your print footprint… down into your core readership areas, so that your supply chain and distribution chain is much cheaper. And then you raise your subscription rates — which all of the big companies have done. So that’s an attempt to keep print viable.

But you’re talking about a generational transition. Anybody who’s under 30 is a digital native and they don’t have the print habit. They might like an occasional New Yorker or Wired that they buy at Barnes and Noble, but subscriptions — not so much. So it’s clear where the future is going, and that’s to some sort of a digital model. And so you have to have a multi-platform strategy, which every news organization to some extent has. But the question is where you put the emphasis in that multi-platform strategy. Our emphasis is on Web-first, because we think we’re building for the future in doing that — but we’re still producing a very strong print product, and it’s doubled in circulation since we launched last April.

When you say “Web first,” obviously you mean that breaking news goes up online first, but do you also mean generally that the Web is your main product?
I look at it from a product point of view, with the weekly and the Web as two distinct products. The Web has some subsets, like email and Kindle applications, while the weekly tends to be a pure-play as a weekly news magazine. I think you need to optimize both of those so that they’re as attractive as possible for the audience they’re geared toward. So, most of the content that we do for print is print-first, and then migrates to the Web after it’s expended its shelf-life in print. But that’s a once-a-week operation. And so with our news staff, which feeds both print and Web, we do probably 70 percent or more of the work we do for online.

Does some of the Web stuff get repurposed in print?
We only repurpose a little bit. Generally speaking, we try to keep the content as fresh and unique as possible, because people are paying $3.50 an issue for this.

In a time when foreign bureaus are being severely cut back, the Monitor still has a pretty impressive breadth in overseas coverage. Is that an ongoing part of the company’s philosophy?
Yes. That’s our real competitive advantage. We have a longstanding foreign operation, and that means we have eight staffed bureaus around the world, but we also have a very extensive database of correspondents who are either on contract or who are just regulars with us. You have to have a foreign desk that really has cultivated those people over the years and has given them work. And we’ve done that. We think our particular value is in global news coverage — with a kind of humane interest. We’re looking at the human dimension. So, not to knock the FT or The Economist or any other news organization — but we’re trying to look as much as possible at the impact of things on people, and what people at NGOs [non-governmental organizations] and diplomats and other people are trying to do to solve problems as the problems are developing. And you have to have correspondents who are living in the country, or who are really understanding that country, to do that well.

When something happens like the Chilean earthquake, we are on that story right away. And in the first one or two news stories we may not have people as the focus, we very quickly try to move to the “why it matters and what’s behind this” part. We did that with Haiti, too. Immediately we look at the problem, but then we try to look at the status of rescue, relief and recovery as much as possible.

The value in that I think is that… if you look on Google News, you’re going to find plenty of good stories about the Haiti earthquake. But if we have one story that makes a difference, or that tries to get at the story behind the story and the human dimension, that’s differentiated from all of those other stories. When you’re looking at the Google News cluster, our stories often stand out because they are geared to some other dimension of the story.

How has your revenue model worked since the move away from daily print, and how has that affected your workflow generally?
Our revenue streams now are print circulation, print advertising, syndication sales and Web ad revenue. We have a daily subscription email with about 2,000 subscribers at $84 a year, that has an abridged version of the daily news stories. I think we’ve got the mix right for us.

It works because we’ve been able to unharness the manpower that used to be devoted to daily print, and free them to work on Web-first content. That’s been the big revelation. When you have print on a daily basis, then everything funnels into those print deadlines. Everything backs up from that, and everything that you’re doing is oriented toward that one deadline, so you’re not really optimizing your posts for the Web, you’re not thinking about trending stories, you’re not thinking about when the best time to post something is, and you’re not living Web-first. And that’s what we’ve done in the past year. We’ve taken a culture that had been a traditional news culture, and we’ve transitioned them to a Web-first one where they understand the rhythms of the Web better. That’s probably been a big factor in contributing to our increase in Web traffic.

Could that have been accomplished had you not killed the print daily?
No. From my experience at the Globe — and talking to my counterparts at other news organizations… Until two or three years ago, news organizations were relatively static on the Web; you would just do an upload of your content from the first or second editions. And then they began at Boston.com and elsewhere doing what is called “continuous news,” where they get these guys with a good wire service metabolism who would be posting continuous news during the day to keep the Web site updated. But that was just a tiny fraction of the manpower in the news organization devoted to that.

Over time that has evolved so that more people are doing more things for Web sites during the day, so that the Web sites have evolved to be updated more often. But, still, the bulk of resources are devoted to daily print production. And I don’t think until you change the frequency of print — or do away with print — in those cases you’ve got the manpower that you can devote to the Web so that you can start to increase your traffic numbers, so that you can reach the scale that may one day be able to pay off in terms of making the Web pay for itself.

We have a five-year plan, and we’re about a year and a half into it — and so far we’re meeting all of our goals. If all three legs of our revenue streams kick in, then the key is really going to be Web ad revenue — and for that you need sufficient scale so that you can subdivide that overall traffic into segments that advertisers really want to hit.

David Hirschman is managing editor at BigThink.com.

When Consumer Reports‘ parent organization, the Consumers Union, was founded in 1936, the U.S. was deep in the Depression and money-conscious citizens were looking for ways to steer clear of shoddily made and unsafe products. The organization promised scientific testing to separate the solid and well-built consumer goods from the rest. Today, the Yonkers, N.Y.-based organization is still at it, and its publications remain among the most read in the country. What’s more, because it is unable to accept advertising, ConsumerReports.org has the most paid subscribers of any content site on the Web: 3.2 million and counting.

At the helm of the company’s editorial arm is Kevin McKean, a longtime fan of consumer magazines with large audiences. With a small staff and more than 20 editorial products to oversee, he says the Consumer Reports brand has endured because it learned from its mistakes early on and adopted a “media neutral” stance. And, he says, you don’t need a lab coat to emulate his success.

Name: Kevin McKean
Position: Editorial director of Consumer Reports
Birthdate: “Before Arianna.”
Hometown: Detroit, Mich.
Education: Yale University
Resume: Started out after college as a night police reporter with the Chicago City News bureau. Moved to Denver to work the night rewrite desk for The Associated Press in 1976 and then continued on to AP bureau in New Orleans. Was transferred to New York to become the AP’s national science writer in 1978. Moved to Discover magazine in 1981 as a writer, and went on to be a senior editor there. In 1987, Time Inc. sold Discover and McKean moved to Money, where he was also a senior editor. Was launch editor for Money‘s Web site in 1994, and then was absorbed into Time Inc.’s new media division. Moved to Forbes.com to be executive editor in the late ’90s. Became editor-in-chief of PC World in 2000, and then CEO of Info World in 2003. Joined Consumer Reports as editorial director in 2005.
First section of the Sunday Times: “I read the Times exclusively online, so I generally read the top news first, and then the columnists.”
Favorite TV show: “Anything on TCM. ’30s and ’40s film noir.”
Last book read: Stalingrad by Antony Beevor
Guilty pleasure: Chocolate

When Consumer Reports started in the 1930s, there wasn’t a whole lot of competition with publications doing consumer advocacy and testing. Today, on blogs and Facebook and Twitter, people are constantly sharing opinions about products. How has that changed the magazine’s approach?
I think it’s greatly changed it… My number one biggest challenge is always the rise of good user opinion on the Web, because I do believe it’s the biggest threat that Consumer Reports faces. That said, I do believe that Consumer Reports will continue to be strong. There is an inherent value to laboratory-based testing that, if it’s done right, cannot be duplicated even by very smart users.

To take an example, when we test a refrigerator we put specially instrumented food-like stuff all over the refrigerator, wires coming out of it, so we can measure the temperature at any one of these points inside the unit. We then close it up and turn it on, and set it for whatever temperature, and put it in a room we can control the temperature of and crank that up to 105 degrees, say. And then we measure how long that refrigerator can hold its temperature and how much energy it takes to do that. And you can look at that across all models. So there are certain things that you can do in a laboratory-based environment that are relevant to purchase decisions. They’re not the only things relevant. If I wanted to know which refrigerator had the best egg trays, I’d probably take user reviews. But we’re the best judge of information that the average user just can’t get, and won’t be able to get without a significant capital investment — that’s the barrier to entry. I think that that’s where we have an edge.

What’s the relationship between your main site and the Consumerist blog you bought from Gawker Media in 2008?
Gawker discovered that it was very hard, for reasons that weren’t totally obvious from the beginning, that it was really hard to get sponsors to buy advertising on a site that runs an annual contest on the worst companies in America. So Gawker got to the point where it put Consumerist up for grabs. We raised our hand, and had a number of talks and that deal eventually went through. Consumerist is very deliberately operated… they are very independent. They run their own editorial operation, they cover a lot of the stuff that Consumer Reports covers.

Do they ever write stuff that disagrees with your coverage?
We haven’t tried to enforce that uniformity on them. Could they come out and take a huge stand if it ran 100 percent counter to what Consumer Reports says? I hope they wouldn’t have to. I can’t imagine that arising. But there are times when the CR guys are jumping up and down about some issue, and the Consumerist is mentioning it but not spending a lot of time on it — and vice versa. It’s just a good, impressive, consumer journalism group. One of the things that I think is so good about them is that the writing is good. The ability of Consumerist to find this dark humor in the machinations of commercial America is fascinating.

The way that it functions in the business here is that they are a very deliberate attempt on our part to reach a younger audience. They are all free and likely to remain so, although I wouldn’t be surprised if we wind up bolting some paid services onto them just to see if there’s information we can’t sell in that environment. They are driven to a much larger extent than Consumer Reports is by social media — though Consumer Reports is getting there.

As you said before, ConsumerReports.org has more than 3 million subscribers, which makes it the largest paid content site in the world. Are there any lessons that you think it has for other publications in terms of charging online?
I would guess that most of the people in traditional media view Consumer Reports as an outlier. They regard the success that Consumer Reports has had as an anomaly. And I have a different view. I think that Consumer Reports had to bite the bullet early on two challenges that a number of media organizations postponed for years to their detriment. The first was: How do you develop paid content? Now, sure, we had an absolute edge with lab-driven content — but you still have to sell it. That’s not easy, and it took years to get that right. And the success of the site is a testament to the marketing people who figured that out. We had many false starts and poor results before we started to get the good ones. We were forced to because there’s no advertising.

The other thing that Consumer Reports had to face early is: “How do you solve the problem of producing content in an integrated way for multimedia outlets?” Our little newsroom of 60 to 70 people feeds two monthly magazines, two monthly newsletters, 15 or 16 one-shot publications per year… the big Web site, the health Web site, the Consumerist, a syndicated video product that goes to 80-plus stations in the U.S. and Canada, a ton of Web videos… Everybody’s got several hats that they wear. So what that means is that the person who is writing the long-form magazine story will then turn around and write the short-form sassy version of the story [for a different magazine], and then may write a blog post that calls attention to it, and then may also put together the script that becomes the video we distribute to our partners, and in some cases then just throw up on YouTube.

Early on, and this predates me, [Consumer Reports] realized that if they stayed just a print company we would die. So in about 2004 they reorganized the entire company based along the lines of being “media neutral.” The idea was that we serve all customers.

“Media neutral” does not mean you write once and then use any way. In fact, every piece of content has to be created for the medium on which it is destined to be published. But first what you get good at creating content for different kinds of media — but second you get really good at repurposing. The interesting thing about the repurpose is that it’s not actually the same piece of content. Shop Smart will take bits and pieces of 10 different tests that appeared in Consumer Reports and other outlets, and they will cobble them together with something of a new spin. And even though nearly all of that content has appeared in some form elsewhere, it’s all new. And because it’s packaged in a new way, you don’t even notice it.

As a reporting agency, you have very strict ethical standards about employees. What is the vetting process like for new hires?
The conflict-of-interest policy was stringent when I got here, but it was tightened up even further since then. So there’s a lengthy form that you have to fill out each year where you have to report your holdings and those of your spouse. The idea is that if you cover autos, you can’t own autos. For someone like me, I don’t cover anything, but in effect I cover everything. So I can’t own anything. For people like me, you can just get big plain vanilla mutual funds, or a blind trust if you have the assets to justify that. We’re very serious about that. We take charges of errors very seriously, we take charges of plagiarism very seriously, and charges of conflict-of-interest very seriously.

David Hirschman is managing editor at BigThink.com.

When she started her career as a Middle East reporter for wire services, Sharon Waxman says she really didn’t envision that she’d end up covering Hollywood. “Was I on the Gaza Strip trying to find an innovative way to get back to the Golden Globes?” she asks with a laugh. “No.” Yet, years later, that’s where Waxman has built her formidable reputation as a reporter and editor, first with the Washington Post and the New York Times, and now with her own site The Wrap — which has made plenty of waves in the entertainment industry as a startup news organization. mediabistro.com spoke to Waxman recently about how The Wrap’s first year has gone, the state of the Hollywood trade press, and the pros and cons of paid content online.

Name: Sharon Waxman
Position: Founder, The Wrap
Hometown: Cleveland, Ohio
Education: Barnard College, St. Antony’s College
Resume: Started out as a reporter in Washington, D.C., and then became a wire service reporter the Middle East. Moved to Paris to be a freelance writer for six years and later to California, where she worked as a writer for The Washington Post‘s Style section for eight years. Spent four years as the Hollywood correspondent for The New York Times before launching The Wrap in January 2009. Author of Loot: The Battle over the Stolen Treasures of the Ancient World and Rebels on the Backlot: Six Maverick Directors and How They Conquered the Hollywood Studio System.
First section of the Sunday New York Times: “I read the Times online.”
Favorite TV show: Big Love
Last book read: Star: How Warren Beatty Seduced America, by Peter Biskind
Guilty pleasure: “Sleep.”
Twitter handle: @sharonwaxman

The Wrap has now been around for over a year, during which time the site has inserted itself pretty aggressively in the Hollywood ecosystem and broken quite a few big stories along the way. Has it gone the way you expected?

I actually didn’t know how it was going to go. I had been warned by Jim VandeHei of Politico to be prepared that, “You know nothing that you think you know.” And he was right about that. It was all very much uncharted territory for me, in terms of knowing if people would read us, or knowing if we would be able to attract the right people. Knowing if the content management system that we built was going to work the way it was supposed to.

It has, actually, been a pretty steady trajectory for us. But every time you hit a milestone in the beginning — in the first four or five months — you think, “Okay, that’s the last time we’re ever going to hit that.” And then we’d surpass it. Then Michael Jackson died in June, and we had our biggest traffic month ever. We doubled our traffic in a month because people were so interested in that story, and because we broke a couple of other major stories earlier in the month. When that happened, my COO Kevin Davis and I looked at each other and said, “Well, that’ll never happen again.” And then, of course, it did. So it’s been a really fantastic year, because it’s been about one stage of growth after another and watching The Wrap become pretty rapidly accepted as a credible source.

Was it hard to gain that credibility?
Actually, the fact that we are a credible source was accepted pretty instantaneously, and that was pretty cool. But that’s really because all of us know each other in the media world. And so you know that if you have someone who’s credible moving from [one] platform to another you say, “Who reported this story?” and that’s where it comes from.

If you have investors who don’t understand the space entirely and we tell them that if we break a story, then people will pay attention, they ask, “What’s your marketing strategy? You have no marketing budget.” And I say, “We’re going to break news. People will pay attention if we break news.” I did believe that, but what happens is that if you break a piece of news, then that brings more people to you who are interested in having you break news. And then those people turn to you to break news. And so that becomes, itself, a marketing strategy, in terms of how you build and grow audiences.

It’s not just credibility. I mean, I have a sign above my desk, that I scrawled one day that says, “Be essential.” And I transmit that message all the time in our meetings. We have to give people information that is essential to their lives. Otherwise they have no reason to read us.

As you’ve been on the upswing this year, traditional entertainment media — like Variety and The Hollywood Reporter — have been on the ropes. Why do you think that’s happening, and how soon do you think one of them will go under?
Variety and Hollywood Reporter are in trouble for the same reasons that all print media is in trouble. They’re very much part of the collapse of the print business model. But it’s exacerbated by the fact that they’ve not adapted — really at all — to the needs of the digital age. So their Web sites have been losing traffic steadily over the last year or two. They’ve been in the same kind of death spiral as newspapers — they’ve been cutting staff and laying off talent, thereby giving readers less and less reason to read them, and therefore attracting less advertising, therefore needing to cut staff more, et cetera. And so they’re really in that cycle, and they’ve not figured out how to make their content essential to their audience.

Far too many people in Hollywood will tell you that they do not read the trades very much anymore. I knew that that was true from before I even started The Wrap. For a very long time, the trades were unbelievably profitable because they had a captive audience, but the Internet changed all that. There’s no captive audience anymore, so you have to prove it every day and earn it every day.

You can’t say, “I’m Variety and therefore you will come to me and read me.” That’s only good for so long. The content experience and the content itself has to be worth people’s time.

Your revenue model for the site at its inception was in large part about ads. I’m wondering whether you’ve been looking into any other revenue streams, or whether you’ve adjusted your model at all in the past year.

We immediately — because of the climate in which we launched — were aware that we were going to need to find other revenue streams. I always had a business model with other revenue streams, but advertising was always the main revenue stream that we intended to rely on. Advertising was extremely challenged last year, and we just don’t know when it’s going to come back — or if it will ever come back in the same way. In general, the advertising digital-to-print ratio is changing, it’s improving, but it’s nowhere near parity. We actually have three revenue streams at the moment: advertising, syndication and events.

Because we report our own original stories and write them — which is not the case with many news sites that mainly aggregate news — we can actually sell that content to third parties. For example, we have a deal with MSN.com, and they pay us for our content in addition to sending us vast amounts of traffic. And I think that we will be finding other partners that want to syndicate our content in a way that does not cannibalize the core audience coming to the site. I think there’s a way to balance that.

What you think of The New York Times‘s plans to charge for content online?
I think it’s really brave, and I really hope it works. I think that the future of quality journalism has to involve payment by the reader and the user, and I’d like to see The Wrap get there too… though I don’t envision the home site being anything but free. So the challenge then becomes finding the right content that a certain segment of readers will pay for.

I have a philosophical belief that people should have to pay for quality content — that they should not be able to get it for free. The idea that you value something more if you pay for it is something that I also subscribe to. If you get it for free, you do not value it as much. So, like a lot of outlets, we are looking at that and watching other people who are doing that.

You’re known as a very competitive reporter. Who is The Wrap’s main competition? Often the site gets put into a category with Deadline Hollywood or sites like Huffington Post and TMZ.
We compete with everybody to break news. Whoever it is in this space, we want to be able to say we got it first. But “getting it first” doesn’t mean that someone gave it to you five minutes before everyone else got the press release. I don’t really think that’s very meaningful to readers. We just want to be on the news all the time, all the time. So, absolutely, Deadline Hollywood’s in the business of breaking news, and so is TMZ, and we compete with them.

But when it comes to that second stage of analysis and commentary, we’re very different from those sites. We’re very much like a large news organization in that we really want to go out and break the story, and then we want to come back and tell the reader why it’s important and put it in context. In that sense, we’re actually competing with the The New York Times, The Wall Street Journal, and the L.A. Times. We don’t have the size of the reporting staff that those places have, but in our sector we have the same expertise. We have the top people in this space who are reporting, I believe. We have the sources, but we don’t have the graphics staff, and we’re not in print.

Nikki Finke’s Deadline.com sold in July 2009 for what was reported to be many millions of dollars. Your traffic, from what I can tell, is not far off from theirs. Do you have plans to sell at some point?
We don’t have any plans to sell The Wrap right now. We have investors, and our investors expect to be able to get a return on their investment, which I fully intend to give them. We’re funded by a venture capital firm, so they’re not in it for the fun. But right now, I’m not really thinking about when we sell the company. I’m thinking about this huge growth opportunity that we have. So we’re currently looking at expanding — expanding our coverage in other verticals that are related to entertainment. And we are raising money at the moment for that expansion.

I definitely wouldn’t rule out our finding an alliance with some bigger media company down the road, but right now I think we’re very much at the beginning of this venture, and I think we feel that we’re on the map in a really significant way, and that there is a huge opportunity for us to become the number one voice in the space. That’s really the goal. And my goal is to create a business model that works for quality journalism.

Clearly we’re not the only people who see that business model out there, but it’s all about being able to execute it successfully. So far, we’re doing that — and we’re having an amazing time.

David Hirschman is editor of mediabistro.com’s Daily Media News Feed.

When longtime newspaperman and Web entrepreneur Alan Mutter started his blog, “Reflections of a Newsosaur,” in 2004, he did so on a lark — thinking that he’d just experiment and learn about the technology. But after posting a few thoughts about the state of the news industry and the coming wave of new media, and then posting a few more, and then a few more, he was hooked. In the five years since, his blog has become a staple in the media world, a regular voice in the ongoing conversation about how the the media will somehow monetize content and save quality journalism. Here he talks about his career, his blog, and why a new wave of sophisticated targeted advertising technology may be journalism’s savior.

Name: Alan Mutter
Position: Blogger, “Reflections of a Newsosaur“
Resume: Began his career as a newspaper columnist and editor in Chicago. In 1984, became the No. 2 editor of the San Francisco Chronicle. Left the newspaper business in 1988 to join InterMedia Partners, a startup cable TV company, and worked his way up to COO. Moved to Silicon Valley in 1996 to head the first of the three startup companies he led as CEO: a pioneering Internet service provider and two enterprise-software companies. Now works as a consultant and is an adjunct lecturer at the Graduate School of Journalism at the University of California – Berkeley.
Birthday: February 6th
Hometown: Chicago
Education: BS and MS in communications from the University of Illinois
Marital status: “Perpetual — I’ve been married for 35 years.”
First section of the Sunday Times: “‘Style’ — specifically ‘Modern Love.’ Sometimes I read the marriages, hoping my daughter will be among them, marrying someone rich.”
Favorite TV show: Seinfeld
Last book read: One Minute to Midnight by Michael Dobbs
Guilty pleasure: “Blogging. It’s cheaper, but less socially acceptable, than going to a shrink.”

Tell me a little about your career and how you got into journalism.
I’ve always been interested in the news and newspapers. I went to this huge high school in Chicago called Lane Tech which had 5,000 students, all boys. They had two tracks: one was a trade track and one was a college prep track, which I was on. But you were still required to have two years of shop. So I had wood shop and electric shop, but they also had print shop — and we had a complete printing press in the building, from linotype machines to a pressroom with really large Heidelberg presses. I just ate up the whole idea of print shop. Across the hall was the office of the Lane Daily, the school newspaper, and I was very involved there. Many weeks, the Daily actually came out every day of the week. Some days, there often wasn’t enough copy. But the essential idea was that it was written by students, then the type was set by the students, and it was printed by the students. So there was a real daily newspaper there. I just thought everything about it was cool — from setting type one letter at a time like Benjamin Franklin, to writing stories and investigating the school administration. As soon as I got threatened with being not allowed to graduate if I ran a story, then I was hooked. I had to be a journalist. That what makes journalists journalists — wanting to disturb the excrement.

I went on to the University of Illinois and had some exceptional professors who keyed me up and helped me get jobs. My first job was in Champaign-Urbana, Illinois at the Champaign-Urbana Courier. Then another of my professors got me an internship at the Chicago Daily News, which was the dream newspaper which I wanted to work for — and I worked there at a great time. One day at the end of my internship, I noticed that my name was still on the schedule in September even though my internship ended in August. So I went to see the managing editor and asked him about it, and he said, “Oh, yeah. You’re hired. Sorry I forgot to tell you.”

I moved through a succession of positions there until the Daily News went out of business on March 4th, 1978. I went right across the hall to the Sun-Times, which was [owned] by the same company. One thing led to another, and I became city editor there. In 1984, when Rupert Murdoch bought the paper, many of us left in a huff — and I was among the huff-ers, or huff-ees, or huff-ingtons. I wound up working at the San Francisco Chronicle, where I was the No. 2 editor between ’84 and ’88. Then someone offered me a job in what turned out to be the cable TV business, and it doubled the pay, and so I did that for a while. Then I heard about the Internet in the summer of 1995, and by the next year I was the CEO of one of a series of Internet companies. I’ve gone on since then to be an investor, CEO, board director, kibitzer, consultant… Lately I’ve been teaching a little bit at UC Berkeley.

What is ViewPass? How did this idea come about, and what are you expecting to do with it?
As you might have heard, things are really tough for the traditional media companies — especially newspapers, but also broadcasters. And more and more conversations have risen up since the beginning of the year about the idea of trying to sell content, and ways to create revenue streams for online content. We’ve been giving it away for free for a decade and a half, and I started talking to people to figure out, ‘Is there some play there in enabling that activity?’ And the more we worked on it and the more we tried to figure out how we could make it happen, the more we became convinced that trying to sell content would be suicidal. There are so many ways for people to access content on the Web that any newspaper or any broadcaster who tried to sell content — under most circumstances — would lose audience and relevance very quickly, and probably have a very difficult time trying to recover the ground that had been lost. Still, we thought there has to be a way to improve life for online publishers — especially those who spend a lot of money creating content. Even the worst-off newspapers and broadcasters today still spend a considerable amount of money creating content. Yet they’re competing with people on the Web for advertising who put no amount of money into creating content.

We came to the realization that advertisers needed to know a lot more about customers on the Web, and that if publishers owned that information and could sell it, [they] could sell advertising at a much higher rate than they can today. If publishers owned their own system to capture demographic information about their readers and the content that they are reading, they could really gain a considerable amount of the power that they’ve lost in terms of being able to sell and the profits that they can extract from that business.

While I freely admit that I’m not allergic to making money off of this idea, we’ve been offering it as an industry-owned solution, because we think it’s important to strengthen the industry. I think professionally generated journalism matters; I think there’s no substitute for it in Twitter or blogging (even my own); and we need people who are full-time on the beat. We need to find a new economic basis that will support that because the traditional means of supporting journalism are breaking down really rapidly.

So this is a totally different concept than the Steve Brill project Journalism Online?
It’s like night and day. The difference between dead and alive. The difference between yin and yang. Steve Brill’s idea is to create a well-known brand, and at some point to get all the affiliates within that brand to start charging for content. Our idea is to create a well-known brand and get a lot of affiliates — in the interest of getting people to register with the service so that we begin to track their activities (who they are, where they’re living, what they buy, what we know about their families, and also what they’re reading…) We want to piece together a profile of that individual. Someone might be reading a stock market story at The Washington Post and some person might be shopping for strollers while another person is shopping for Buicks, and another is looking for cemetery plots — those are two different people. So they may be reading the same story, but the advertisement that you put in front of them could be based not simply by the context, but also by their interest.

This is a big opportunity. When you think of where the puck is going, you know that advertisers want to be much more targeted in where they place their money. Publishers need to play seriously in the interactive world, and they need to be able to target advertising. Publishers on the ViewPass system — if they are able to capture a holistic view of the person’s reading patterns as well as deep, detailed demographic data about consumers, publishers will have an unsurpassed advantage in the future, when it is all about creating “audiences of one in the moment.” This would far surpass what a Google is able to do today, or Tacoda, or anyone else who does behavioral targeting. So this is a game-changer if the publishers can get it together to do it.

The other big difference between us and Steve Brill is that our solution would be created by and for the industry. Brill’s business is a for-profit business where private capital would expect a percentage of the profits — and I’m not against that. But if the industry outsources something that is absolutely core to its future, then it’s outsourcing its future. Owning the data about the customers, I’d argue, is significantly more valuable than owning your own trucks or printing presses. Or whether they own the buildings where their people sit.

Are there any other projects that people are doing in terms of monetizing content that you think are interesting?
There are essentially only two ways to monetize content. One way is to charge for it, and the other way is advertising. And frankly, the advertising systems that have evolved today for the Internet world are very crude. In a few years, we’re going to look back on buying keyword ads on Google — that way of advertising is going to start looking like using leeches to bleed people back in the Revolutionary War. Modern advertising is going to be like nano-surgery, where it just zaps at a particular errant cell. I’m not taking anything away from Google; it’s the state of the art right now. It’s just extremely inefficient at matching buyers and sellers; it’s not a particularly efficient system for the advertisers or for Google, but because it happens at such scale — and because Google doesn’t put in any money to tracking the audience, it works. I’m not here to tell you that Google is doing a bad job, or is an endangered species. They do the best job with what we know about today. But what I am saying in regards to advertising is that we have really klutzy systems today. But if you look at the market forces today, everything tells you that it’s got to change, and it’s got to change profoundly.

Why did you start ‘Reflections of a Newsosaur,’ and what’s it all about?
It got started by accident. In the later part of 2004, I was approached by someone who had an idea of making a master blog or uber-blog, picking the best stuff — in retrospect it was a little like [what] The Huffington Post turned out to be. At the time I was aware that lots of people were blogging, but I couldn’t quite tell what to make of it — in the same way I can’t tell what to make of Twitter now. I know people are doing it and talking about it, but I don’t know the meaning of it. So one night I set up a blog on [Google publishing tool] Blogger just to see what the technology experience was like. And the second question they ask you is, “What’s the name of your blog?” And I came up with “Reflections of a Newsosaur.” Then I started posting, and I’ve been doing it ever since.

I felt that we were at a point of seminal change, and I knew enough, and cared enough, about the media business and where it was going — and had a decent enough knowledge of the technology — that I knew what technology was doing and was likely to do next. I had the feeling that there were very few people at the point of appreciating the old and understanding the new. My sense of it then, and it is today, [is] that the people who are involved in the traditional media are not trying to find ways to change their business. Instead, they’re trying to preserve and protect and defend the business that they know and love, and are resisting against change.

There was no sufficient appreciation among the suits in the media about how their business was threatened by new media. I mean, we just knew this was coming — it was obvious. And there were not very many people who were, on a regular basis, sounding the alarm and trying to prod the old media into coming to appreciate and react and respond proactively to these changes.

I figured nobody else was really writing about it, and so I would. Did I think it was going to change the world? Probably not. And in fact I haven’t. Someone asked me recently, “Have you changed your thoughts about this stuff now that you’ve been writing the blog for five years?” And the honest answer is, “Absolutely not.” I was saying the exact same thing then that I am saying today — only I’ve changed the verb tense. Then I was saying, ‘If you don’t do this, then your business is going to be f*cked.’ Now I’m saying, ‘Your business is f*cked because you didn’t do this.’ But it’s not any different.

As a former newspaper guy, do you have a nostalgia for the old way of doing things and the culture around a newsroom?
Oh absolutely. I love it. But it’s not happening anymore, and we have to get over it.

If you were in charge of The New York Times and were faced with that paper’s problems today, what would you do to insure it’s still around in five years or 10 years?
I would be developing a number of niche, premium products that you could charge money for, because I believe the high-quality and specialized content is very valuable, and a place like The New York Times can get paid for doing its job by selling that information. The other thing, which I’ve discussed at some length, is to move into more intelligent advertising systems.

I think that we’ve come to a point now, in terms of the arc of the printed product, that where the customer is and where the economy is are the two factors at hand. If the economy were healthier, there would probably be more money to support the production of the physical product. We are in a definite long-term economic drop that works against the print product. At the same time, we’re also in a clear demographic shift, where younger people don’t prize the print product as much as older people embrace it. So I think you have to plan for having ever less reliance on the printed product. I would be thinking about building out channels of information and building community around those channels. If you want to play in the new media world, you have to act like a new media company. Yelp is, Twitter is — and newspapers aren’t right now.

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.

Given the extent to which social networks now pervade many of our lives, it’s hard to believe that just two years ago there was no such thing as a Facebook app. Since then, of course, there has been an explosion of activity around social media, fueled in no small part by third-party applications and games. Mark Pincus founded social media gaming company Zynga right at the cusp of Facebook’s app boom, and his company is reportedly already taking in upwards of $100 million annually. Zynga currently boasts 30 million daily active users of their social media games (which include Texas Hold’Em, YoVille, FarmVille and Mafia Wars) — and these numbers keep growing. mediabistro.com spoke to the company’s founder, Mark Pincus, about the sudden, meteoric rise of his social gaming network and what Zynga’s monetization model might teach other media companies.

Name: Mark Pincus
Position: CEO, Zynga
Resume: Started Web-based consumer service Freeloader in 1995 and sold that company seven months later. He next founded SupportSoft, a provider of service and support automation software. In 2003, he founded Tribe Networks, one of the first online community and social networking sites, and later sold its core technology to Cisco. In 2007, he founded Zynga, which is now the largest social gaming network.
Birthdate: February 13, 1966
Hometown: Chicago
Education: Went to the University of Pennsylvania’s Wharton business School undergrad, and received an MBA from Harvard Business School.
Marital status: Married
First section of the Sunday New York Times: “Either the ‘Business’ section or ‘Style.'”
Favorite TV Show: Lost
Last book read: Freakonomics
Guilty pleasure: Chicago-style pizza.

Tell me a little about your career path.
It all started with reading George Gilder’s book Microcosm, which talked about the economic future of the world being inside everything around us. The prior hundred years was building out the physical world, and the next hundred years would be spent building out the microcosm world. I kind of built a vision based on that, which drove me into new media.

I worked at TCI and their interactive TV channels, and that eventually led me, in 1995, to starting my first company, an early consumer Internet company called Freeloader, which was the first push technology service on the Internet. That got acquired after seven months and then I went back to brainstorm mode, which led me to my second company, Support.com, which was an enterprise software company. I built it in pursuit of building a consumer service, and then I built an enterprise software company by accident.

[From] 2002-2003, I invested in Friendster and I started Tribe, which was one of the first social networking sites. That ultimately failed as a kind of locally focused Craigslist-meets-Friendster, but in 2006 I took it back over from the investors, repositioned it and sold it to Cisco. It became the nucleus of their new media division.

Then I went back to brainstorming mode in 2006, and began working on my first game for Facebook. They had announced that they were opening their API in May of 2007, so I started building our first game, which was a social poker game, and launched that July 1st of ’07.

Obviously, before they opened it up, nobody really even knew what a powerful thing a Facebook app could be. How did you see the opportunity for this at the time?
While I was doing Tribe, we realized that there would be a new arms race in new software features for social networks… The whole time I was doing Tribe, I thought that the thing I would have loved to do is games. I’ve always said that social networks are like a great cocktail party: You’re happy at first to see your good friends, but the value of the cocktail party is in the weak ties. It’s the people you wouldn’t have thought of meeting; it’s the friends-of-friends. And that’s sort of the power since the beginning of Friendster — seeing all of the other connections, not the obvious ones.

What I thought was the ultimate thing you can do — once you bring all of your friends and their friends together — is play games. And I’ve always been a closet gamer, but I never have the time and can never get all of my friends together in one place. So the power of my friends already being there and connected, and then adding games, seemed like a big idea.

It was really f*cking hard to do games. They’re not viral by their nature. When you think about going to a poker table, you don’t naturally think, ‘Oh, it would be so much fun if I just got all my friends to the table, too.’ The reason I stuck with it is that I was really interested in the potential for social games, and I thought that if I could get over the virality hump, they would have far more engagement.

What are some of the lessons you learned from your past ventures that are informing Zynga?
[The] No. 1 biggest lesson has been ‘fail fast.’ I wish I had just failed fast with Tribe. I think that entrepreneurs are always at risk of mistaking stubbornness for conviction and commitment. Just because you’ll stick with an idea doesn’t necessarily make you a winner, and it could delay you failing and getting to the right answer.

[The second lesson] is to test ideas as cheaply and quickly and often as you can. Tribe was just one version of a social network — it’s Friendster-meets-Craigslist and it’s very public. Great! That’s just one idea that we should test cheaply and quickly, let’s do five others as well. A social network for Mormons, a social network for Chinese poker players. If I could turn back the clock, I would have spent more time turning Tribe into a testing platform for social networks rather than just committing to a single instantiation.

I’ve read that you have an annual revenue of over $100 million now, after just a couple of years. I imagine you can’t confirm the actual numbers, but how quickly was the company profitable after you launched?
We have publicly stated that the company was profitable by September of 2007. And that was pretty intentional on our part. Another lesson that I’ve learned with this project is: ‘If at all possible, control your destiny.’ The best way to control your own destiny is to be profitable and to not need capital. If you’re profitable and you don’t need money, you have a different relationship with your investors. Then they’re just your partners. In too many startups, the board and the VCs quickly become like your boss or your parents.

To tie this into an online business lesson: Up until 2007, engagement was a bad thing on the Internet. Before then, the sites with the least engagement made the most money and the sites with the most engagement made the least money. Tribe had crazy engagement — people spent all day on it — but we couldn’t make any money off of them because Internet ads are paid when you leave a site, and so the more time you spend on my site, the more money you lose.

When you think about being in the game business, where you’re providing someone a really engaged experience, they don’t want to leave. You don’t want to leave in the middle of a poker hand to click on a Caribbean cruise ad, even if you want to go on a Caribbean cruise. So there’s this inherent inverse relationship. So I wanted to have a business model where the deeper the engagement I had from the user, the more money I would make.

Is that why you are less focused on advertising as a monetization model for Zynga?
The bulk of our revenues come from users paying for items in the games. Either currencies or IMs or other things they want. So our revenues come from people who are the most passionate about our games. They’re so into our poker game that they will buy more chips so that they can play at a high roller table. In an ad model, those are the people I would never make any money off of.

It was a priority for me that we would not just test for virality or for engagement, but that we would test for revenues, as well. So from the beginning it was one of our goals to come up with a different monetization model that we could scale with our user base and allow us to grow without support from ads and outside investors.

You got an early jump on apps, but now there are thousands more. When you introduce a new one, how can you make it stand out, and how has competition changed the way you do things?
We actually increased our market share in the past two quarters, and most of our growth has come from growing our existing game franchises. Unlike the games industry, we’re running our games as a service. And so we are every day working on features and content and other things that will create long-term engagement with users, just like Facebook is. Our mission is to connect the world through games, not to build the most games or the best games. Everything we do is about helping our users build more social capital.

There’s three fundamental principles that we innovate around with our games. Number one: Play with real friends. We do more and more to make sure your real friends are in the game with you and there’s more and more things that you can do that are collaborating and competing with your friends. Two: Express yourself through our games. So we do more and more — whether it’s avatars and virtual worlds or just the way you can express yourself in a text role-playing game — to let you express your unique personality in the game. Number three: Invest in the game. Whether it’s owning items or properties or leveling, we give you a real sense that you have a deepening investment in the game — that it’s something you don’t walk away from.

I do think that what’s going on with Zynga is representative of bigger, macro changes and opportunities. The idea of consumer services that are distributed as an app and paid for through users paying the ‘freemium’ or whatever model — that is an important and awesome change in the Internet business model that I think is going to be expanded and fleshed out over the next five or 10 years.

David Hirschman is editor of mediabistro.com’s Daily Media Newsfeed.