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Google Publishing Dow Jones

Dow Jones chief accuses Google and Facebook of 'killing news'

By Ian Burrell, Columnist

December 1, 2016 | 13 min read

Seated in the dining room of a Belle Époque-era London hotel, the chief executive officer of Dow Jones & Company briefly draws attention to his new vegetable-based diet before launching into a spleen-venting explanation of why he has had an utter bellyful of the two great gatekeepers of the modern media age, Facebook and Google, and accusing them of “killing news”.

Dow Jones CEO Will Lewis

Will Lewis wants to seize this moment. The election of Donald J Trump as 45th president of the United States has provoked an unprecedented storm over 'fake news', with those two Internet giants blamed for providing the platforms that allowed con artists from as far away as Macedonia to deceive the American public – and advertisers – with an avalanche of fraudulent clickbait stories.

Slightly disconcertingly, Lewis says he is “so thrilled” by the controversy. This is not because American voters were misled but because Facebook and Google have been embarrassed and forced to reconsider the complex algorithms they deploy to present news articles to their users.

It’s a matter of schadenfreude. Lewis has spent much of the three years since he became chief executive at Dow Jones and publisher of the Wall Street Journal “badgering away” at Google and Facebook, trying to persuade them to change their news distribution methods. “We kept warning them, saying ‘This is an accident waiting to happen – you are treating fake news in the same way as you are treating Wall Street Journal news. This is going to end up biting you.’ And so here it is, biting them!”

Lewis is one of Rupert Murdoch’s most valued executives. He spent election night “with Rupert actually” at “1211” (the headquarters of Murdoch’s 21st Century Fox and News Corp empires, on Avenue of the Americas in Manhattan). And it was the 85-year-old Australian-born mogul who assessed Trump’s victory and the consequent fallout over American media coverage of the campaign, and smelled money.

News Corp has gone on the offensive. It has launched an advertising campaign to increase Journal subscriptions, under the slogan 'Where You Get Your News From Has Never Mattered More'. The ads contrast the Journal’s election coverage with that of rival news organisations which convinced themselves that Trump was destined to lose. The campaign also reminds viewers of the proliferation of fake journalism online, thus tightening the pressure on the corporate reputations of Google and Facebook.

“He has driven this,” says Lewis of Murdoch. “He gave us three days to turn [the campaign] around in good old-fashioned style, so we have run at this very hard.”

Feeling the pain

This would all amount to a happy confluence of events for Lewis and News Corp, if it were not for the fact that in October the Dow Jones chief announced a new austerity strategy for the Journal called 'WSJ2020'. It was his radical response to the pain of a 21% fall in its print advertising revenues in the last quarter and it involved shearing 8% off the cost base and making major cuts to staffing in the newsroom.

While Lewis acknowledges that this process has been “tough”, he cites the severe financial pressures on professional media as clear evidence of why the treatment of news by Google and Facebook is unacceptable. “What is absolutely clear is that when it comes to news, respecting and enhancing the ability of professional news operations to do our job, they (Google and Facebook) are rubbish!” he exclaims. “They have to stop pretending that they are going to do something about it and actually start doing something about it.”

The former editor of the Daily Telegraph goes to the brink of accusing these companies of sharp practice, revealing his London roots in his use of rhyming slang for “pinched”, meaning stolen away. “The digital advertising revenue that we (news organisations) had all been forecasting has been ‘half-inched’ by Facebook and Google. They have taken the money to advertise around our content. It’s wrong and it has to stop.”

It has been a long while since a Murdoch senior lieutenant lashed out against the tech giants using such aggressive language. News Corp chief executive Robert Thomson memorably denounced Google back in 2009, comparing its operations to “parasites or tech tapeworms in the intestines of the internet”.

More recent discussions between the Murdoch empire and Mountain View have been more civil, if sometimes strained. Lewis acknowledges that News Corp has a “multi-layered, complex set of relationships” with both Google and Facebook. But for all the “lovely offices, lovely people and all that”, which he encounters on business trips to Silicon Valley, he has tired of the platitudes at “endless Google and Facebook meetings when the free M&Ms are handed out…”

His message to the two companies today is stark. “Guys, you are killing news, you are killing news and you have got to recognise this.”

Specifically, Lewis’s problem is with Google’s decade-old First Click Free (FCF) programme, which – in the tech giant’s words – is designed to help users of Google News “get access to high quality news with a minimum of effort”. Publishers like Dow Jones which charge for content must offer users at least three free articles a day without requiring a subscription. Lewis decries the lack of “flexibility” of FCF, variously describing it as an “apartheid system” and a “pernicious system”, which “penalises” by hiding away in Google Search the content of subscription-based publications.

He uses the fake news controversy to underline the point, accusing Google News of prioritising free but fabricated articles over high-end paid-for content. “The day after the election, if you put in ‘results of the election’, fake sites were coming in the top 10. On a public policy level it is unacceptable.”

As for Facebook, his beef is with the platform’s ban on pre-roll and post-roll video advertising, even if that is simply the Journal including its subscription pricing alongside some high-quality free visual content. “We want to put advertising revenue around our video and we can’t,” he complains.

He claims to understand the argument of the tech companies that their priority is the experience of their users, but argues that it is “not beyond the wit” of the various parties to incorporate third-party advertising and subscription offers in a “world-class Google or Facebook experience”. But the internet giants, he claims, “are not bothering to try”.

A message to other publishers

It might be opportune to be having this fight now, using the fake news scandal as leverage. But News Corp will struggle to effect change without the support of the rest of the news industry. So Lewis bangs his drum. “We at Dow Jones and News Corp have done more than our bit for the industry to batter away at getting these companies to do this. Others have also got to do the same and stop being so weak and lightweight and start being much more vociferous and strong.”

Many news businesses are in a “near-death situation” over the decline in advertising and must act fast, he says. “It’s not too late but it is almost midnight for a lot of people.”

Whether News Corp is able to rally the industry in this way is open to question. If the new Journal ad campaign is intended to embarrass Google and Facebook, it is more obviously an attempt to score points against its news publishing rivals in the post-election battle for new subscriptions.

The Trump victory was especially uncomfortable for the New York Times and the president-elect turned on what he called the “failing” paper for its negative coverage of his campaign. The Times countered by saying it had piled on 41,000 new subscribers in the week since the election.

Lewis says that neither he, nor readers of the Wall Street Journal, were blindsided by Trump’s win. “New York Times readers were extremely surprised by Trump’s victory, right? Our readers were ready. Some were delighted, some were aghast, but they were ready because we had been writing for months and months… saying that if you are not just a New York newspaper [but] a truly genuinely American newspaper for all of America you can’t help but recognise that large parts of America are really angry and that people are having to work two, three jobs to pay their mortgages, their medical bills, their food bills and there is no prospect of life getting any better for them.”

For news publishers who “travel like I do across America regularly”, getting in between the east and west coasts, “it wasn’t that hard to see just how angry people were”. His personal election theory highlights the failings of the US news industry. ‘Ordinary people just felt they were being shouted at by the media and just switched off. They thought ‘You are all biased therefore I don’t know what to believe and I am going to go with my instincts and the guy who looks like he is as angry as me.’”

The Journal has emerged untarnished by this, he claims, because despite the conservative leanings of its comment pages it endorsed neither candidate and subjected both to scrutiny. “We investigated both appropriately, we did stories that he didn’t like and stories that she didn’t like.” He praises the newsroom for holding its nerve during one of the most highly-charged campaigns in American political history. “A lot of people (at other news organisations) lost their heads during this election and without sounding like the oldest man in the room I have done enough elections to know that you have got to keep a really cool head because it’s a time when you can not only enhance your brand values but really destroy them.”

Some of this is industry point-scoring. The New York Times is hardly a city paper and its 1.5m digital subscriber base is some distance ahead of the Journal’s total of just over a million. But, across its portfolio, Dow Jones has 2.5 million subscriptions (including a further 1 million who take the WSJ in print) and is on course to reach a target of 3 million set by Lewis shortly after he became CEO.

“I confidently expect the 3 million barrier to be smashed through in good time, to the extent that I am actually thinking seriously about extending that goal,” he says. “I am thinking there is probably substantial uplift potential in future subscription growth.”

'Monetising news is pretty straightfoward'

Setting that challenging 3 million target, which he says will be achieved next year, was “a little bit frisky” but intended as a signal in 2013 that Dow Jones was “aiming for growth” and not merely managing decline. Today, for all the cuts related to WSJ2020, Lewis claims that Dow Jones’s long-term financial future is secure, thanks to it having a breadth of revenue streams ranging from the august financial magazine Barron’s to new products such as experimental London-based app WSJ City.

“It’s now clear,” he says. “Monetising news is pretty straightforward. You can get print advertising, digital advertising, subscriptions, you can sell data packages, you can sell custom content, which is booming, you can put on live events, you can do verticals like WSJ Pro where we charge you extra for extra information. It’s harder than it was but it’s definitely fine – there’s a proven way forward to monetise professional journalism.”

More confident talk. He is briefly despondent again when discussing investigative journalism, which he believes is in the doldrums across the industry. The reporting of tech companies is “pathetic” he says, presumably with Google and Facebook in mind.

His proudest moment as a journalist was when member of parliament refused to shake his hand shortly after the Telegraph, which he was then editing, exposed the UK parliamentary expenses scandal. A weakened news industry is not holding the British and American establishments to account. “What we do need is a new breed of brilliant journalists coming through who are prepared to not get knighthoods and do brilliant investigative journalism and I don’t see that at the moment and it is worrying.”

He credits the Journal’s newsroom for its work on the Malaysian 1MDB corruption scandal – originally exposed by British investigative journalist Clare Rewcastle Brown – and a painstaking and courageous investigation into Theranos, a blood-testing start up with powerful backers.

Given all that Lewis says about the need for high-quality professional journalism being greater than ever, and about this being a critical moment for the Journal to demonstrate its offering to a public that needs it, and about Dow Jones having a safe future, there is an obvious question: why is he hacking away at the newsroom and not investing in it more?

“It’s a very good question. Yeah, yes. It’s a very good point,” he begins with rare uncertainty before making an even more doleful assessment of the collapse in print advertising (which he blames on rash talk last May by some “kids at agencies” who he claims fail to appreciate that print is still the preferred medium of much of the American establishment).

It is a storm so severe that he had to act, he says. "When one of your main revenue lines falls 21 per cent you can’t, as chief executive, sit there going 'Well, I’m sorry there’s nothing I can do.' You have to cut your cloth accordingly.”

But then his fighting talk returns and he is making a promise not just to the Journal’s editorial staff but presumably to new subscribers too. “Over time, do I see the newsroom getting bigger? Yes, I do. And are we going to continue to invest in our journalism? Yes, we are.”

Ian Burrell's column, The News Business, is published on The Drum each Thursday. Follow Ian on Twitter @iburrell

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