How does Politico plan to stay fresh while also making money? Executive editor VandeHei, who has an intense stare and speaks a bit like a character from a Christian Slater movie, shared some thoughts last week from the publication’s office in Arlington, Va. Here’s some highlights (our conversation has been edited for length and clarity).

Competition and staying relevant

Politico shook up the Washington media establishment when it launched in 2007. Do you feel as relevant now?

JV: We’re still in the middle of the great media disruption. Anyone who thinks that because they have success today, they’ll have success tomorrow I think is a fool.

We’re constantly evolving our content and our technology to the ways that people are actually consuming information rather than the way we wished they would consume it. One of the things that makes me most proud about Politico is that six or seven years into this, we’re as restless today as when we launched the publication. Every media executive has to think that way or you’re just going to get your clock cleaned.

Who scares you the most?

JV: Our core competition journalistically is the Washington Post, the Wall Street Journal, the New York Times. Financially, our competitive sets are different. On issue advertising, it’s everyone from the Post to the Atlantic to Roll Call. When it comes to selling high-end subscriptions our competition is Bloomberg’s BGov and, to a lesser extent, CQ and National Journal.

Who scares me the most? The entity that should worry media companies the most is Bloomberg because they have huge ambitions and huge cash reserves and they clearly have an appetite for more Washington coverage.

What about the people who say Bloomberg’s Washington strategy has fallen short? 

JV: It seems BGov hasn’t been as much of a success as Bloomberg had hoped. I would like to think that we’re one of the big reasons they’ve had trouble penetrating this market. Through Pro, we produce a product for each particular vertical and we have expertise in the Washington market. What might have hurt Bloomberg when they came into this market is that their expertise is fundamentally in financial information and New York. There’s a different type of expertise and reader here.

On making money in media

What about growth? How do you grow in a small, saturated Washington market?

JV: You grow by finding new revenue streams and squeezing more money from the revenue streams you already have. This is a unique market where almost all of our advertising is advocacy advertising. Every person in this space feels Politico is the first stop they have to make to influence lawmakers. We continue to grow that slice of the pie every year. Can we grow it forever? I don’t know.

But like any media company, you don’t want to be dependent on one revenue stream so about three and a half years ago we launched Politico Pro, our high-end subscription service. We also added events and the last few weeks, we’ve been testing metered subscription in six different small states scattered across the country.

What about pricing for Pro? You guys have been a little coy about describing specifics.

JV: I don’t know if we’ve been super coy. The problem is that, when you say you have 1,000 subscribers, that includes subscribers like Microsoft that have hundreds of licenses. Subscriptions can run at the low end in the $7,000 range to, at the high end, six figures, depending on the institution. It all depends on how much content you need, how many verticals, how big your organization is.

We get 96% renewal rates and everyone pays more the second year than they did the first year. We have 230-240 employees and will have about 265 by the end of year. It’s a growing media company.

What was up with the layoffs (reported in January by the Huffington Post’s Michael Calderone?)

JV: We never had layoffs. We’ve had people that come and go — I can’t imagine a journalistic market that has more turnover than this one. We told them it was a stupid story when it was written and it’s proven itself to be.

We’re continuing to grow. And that’s why we think a lot about the business and economics of this – I don’t ever want to work for a company that has to lay people off. I’ve been at one of those and it’s not a fun thing to be part of. We think as much about the business side of journalism as we do about the journalism side of journalism. The two have to work together.

You’re experimenting with the content engine Taboola, which displays a lot of scare ads about cancer or buying gold. It’s a revenue stream, but do you ever worry about compromising the user experience?

JV: Let me put that in two categories. One, we’re lucky in that we usually sell out our Washington inventory direct, which allows us to get a pretty nice CPM. Most of our ads are premium, advocacy ads. For some of our national buys, there probably is a fair amount of network ads and we’re careful not to let them cheapen the site, though one or two might sneak through occasionally.

But as for cheapening the user experience, I worry a lot more about the design of the site than the specifics of the ad. I think that media, because it’s trying to test so many things simultaneously, has sort of created a NASCAR-effect to web design with all kinds of crap everywhere that nobody’s looking at. It’s incumbent on all of us to simplify the design.

On media stars and the future of journalism

Andrew Sullivan and his staff at The Dish

What about the trend of star journalists becoming their own brands? Ben Smith decamped for BuzzFeed, Andrew Sullivan left the Daily Beast to start his own site and Nate Silver could leave the Times to set up shop on his own. Is that an issue for Politico?

JV: It is what it is. I think it’s fabulous for journalists. You can suddenly get in the business of journalism, create a public identity and reputation, and – if you’re so good that you can build a substantial following, you, yourself, can be a franchise. You can actually make money in journalism. Hell, you couldn’t do that five or 10 years ago.

People might bemoan what’s happening in journalism, but we don’t have time to whine. We have to deal with: what are the trends in journalism and the way people are consuming information? And then produce first-class journalism and hook it up to a first-class business model. For the rest, let the hand-wringers worry about it.

How will the impending sale of the TV stations held by Politico’s parent company, Allbritton Communications, affect operations?

JV: It should affect us in pretty big ways. Robert Allbritton’s a young guy in his 40’s who’s been a tremendous publisher and extremely supportive of this publication. He’s basically asked us to go out and find other things in media for us to invest in, inside and outside of Politico. I think the sale of the TV stations is nothing but good for Politico and nothing but good for media. The more people we have out there testing what works and what doesn’t, the better chance we collectively have as an industry to find ways to make all this work in a way that educates, informs and entertains people.

On media habits and (not) watching TV

What are your own favorite journalists and publications?

JV: I live and breathe politics so obviously, it’s Politico. I’m a sports junkie, in particular a Green Bay Packer junkie, so I spend a lot of time on Bleacher Report and the Milwaukee Journal Sentinel Packer page.

I’m a big admirer of David Carr of the New York Times and Jim Romenesko — what Niemen does and what Columbia does. All Things Digital and Kara Swisher, who is a person I deeply admire.

Foreign Policy is a fantastic site that I feel is modeled after Politico and has done a good job of dominating the specific space of the media [apparently: Politico just hired FP's editor-in-chief]. I remain a huge fan of the Wall Street Journal, where I once worked, and the New York Times. My absolute favorite column in the Times is Corner Office, which is the first thing I’d read on a Sunday morning.

Do you have time for TV or movies?

I really don’t. We finally got out of the dark ages and got Netflix and watched House of Cards. You’d think I’d have more of a life and watch something that has nothing to do with politics, but I don’t. I have young kids so we’ve watched American Idol until this season, which sucked. But if I’m going to watch TV, 90% of the time it’s going to be news like Charlie Rose or 60 Minutes.

Anything else about Politico or about you that you want to get out there?

When people cover us and think of us, I sometime worry that people view us through the lens that we’re the New York Times in 1995, and the obligations the Times had to a broad readership and to define what people should read and not read – as opposed to what we are, which is a specialty publication for political and policy junkies.

Fundamentally, it’s just a bigger version of the beast we created in 2007.

In his slideshow for investors, which was noticed first by the Times of London, the Wall Street Journal publisher showed a mockup of a profile page for a social network that would connect readers of the newspaper and allow them to share personal messages, find other readers with similar interests and so on. The page includes sections for a short bio or “about me,” work experience, industry affiliations, awards and several other categories.

Do WSJ readers want their own network?

Setting up this kind of network for readers to connect with each other makes perfect sense — or at least it would have five or six years ago, before LinkedIn and Facebook and other networks had become as dominant as they are now. But what the WSJ is describing looks and sounds virtually identical to LinkedIn — except that LinkedIn allows users to connect with thousands of different people, regardless of whether they read the Wall Street Journal or not.

Is being a WSJ reader enough of a draw to make such a network succeed? I’m doubtful, but it looks like the newspaper is going to give it a shot anyway. Presumably, it will then use the data that users upload or share to target advertising and other promotional efforts (although advertisers might also be more interested in LinkedIn). It’s worth noting that Fenwick didn’t mention any competitive threats from LinkedIn or anyone else in his presentation.

Bloomberg is also feeling the pressure

Meanwhile, Bloomberg appears to be trying to jump-start a social network of some kind called Current — although all there is right now is a sign-up page and a somewhat uninspiring Twitter account that hasn’t posted anything since October. After doing some digging around, it looks to me like Current could be a re-branded or revamped version of BusinessWeek‘s Business Exchange or BWBX, which the magazine launched several years ago with the aim of creating an exclusive network for its readers, without much success.

Bloomberg’s core business is also clearly threatened by both LinkedIn and Twitter. Although the wire service has made the bulk of its multibillion-dollar revenues from selling its proprietary terminals, one crucial factor in the value of those terminals is the way they allow traders, brokers and other financial professionals to connect with each other, send instant messages and so on. Real-time market data is also important, obviously, but those connections are gold.

If you want to connect with someone in real-time about a topic, Twitter also has a massive network that allows you to do that, and it is far broader than Bloomberg’s — although that broadness could be seen as a disadvantage by some. There’s even a kind of finance-only version of Twitter called StockTwits (see disclosure below) that has become very popular with traders and investors. And LinkedIn also has a vast user base of corporate professionals, with many of the same features that a Bloomberg social network theoretically might offer.

So the question for both the Wall Street Journal and Bloomberg is: Why would readers or users come to your network instead of using those other ones? What are you offering that is superior, apart from the reflected glory of your brand name, that could overcome their established network effects? If you don’t have a strong answer to those questions, then you will almost certainly fail.

Disclosure: StockTwits is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, GigaOM. Om Malik, founder of GigaOM, is also a venture partner at True.

Post and thumbnail photos courtesy of Shutterstock / Thomas Pajot

Dow Jones will enter the transition under Lex Fenwick, a data-driven former Bloomberg executive who has been actively remaking the company in the image of his former employer. Fenwick has been spending heavily on technology in the hopes of tying Dow Jones’ disparate pieces into a unified platform.

To get a better look at how this will unfold — and whether it will work from a business standpoint — I spoke with several current and former Dow Jones executives. Here’s some takeaways:

Developers to the rescue

“I honestly believe there are few problems that can’t be solved with a developer,” says Stephen Orban, who joined Dow Jones as Head of Technology in February.

Orban’s primary task is to meld Dow Jones’ sprawling suite of discrete business products — which include Factiva, Newswires, Companies and Executives, Insights, and Risk and Compliance — into a single bundle with unified functions like search and messaging. At the same time, he has to figure out how to better wrap together consumer-facing titles like the Journal, Barrons and All Things D — and then tack them onto the business bundle.

To make it work, Orban, who says he is on a “hiring tear,” must not only stitch together an ungainly combination of legacy products, but also do so in a company historically focused more on news than technology. ”I have every understanding that, while I want to be a tech company, we’re still a news and content company,” said Orban. “We’re trying to create a more technology-friendly, fast-moving, agile place to have your career.”

He added that the plan is to create “a whole bunch of start-ups.” These groups will work within resources pools dedicated to groups like editorial and DJX, which is the name for the integrated suite of Dow Jones business products. To ensure the whole thing doesn’t devolve into unaccountable fiefdoms, the company will rely on quarterly meetings where teams will explain what they’re up to.

If all goes well, Dow Jones will be able to acquire new customers and upsell existing ones with the promise of a news and data bundle that is cheaper than Bloomberg (whose annual licenses start north of $20K). Meanwhile, the company will urge consumers to adopt new platforms tools like “WSJ Secure” — a future Dropbox-like product to store financial or personal documents and “WSJ Profile.” Here’s how Fenwick described the grand scheme of things this week:

“If you build applications and you become a platform, it does lots of magical things that help us. It increases the customer’s stickiness.”

Far-sighted or folly? Former execs are skeptical

Fenwick’s arrival last February triggered a change-of-guard exodus at Dow Jones, one that was likely accelerated by his pugnaciousness and foul-mouth (“This is not what I wanted! Are you a fucking idiot?” is just one sample quote in a recent Reuters profile).

As for the actual state of Dow Jones’ business, two former executives portrayed it in a similar light but offered different assessments of Fenwick’s prescription.

The executives, who did not want to be named, both said that Dow Jones’ enterprise revenue — particularly that from its newswire service — has been in dramatic decline even as the Journal has held steady (the paper has weathered a rocky ad market thanks to digital subscription revenues).

The plan to be more Bloomberg-like, however, drew a snort of derision from one of the former executives, who believes that Dow Jones’ product suite — even when lashed together — is too weak and disparate to be useful to enterprise clients. He added that using the combined suite as a reason to increase prices will lead existing customers to bolt altogether.

The other former executive, however, said the product consolidations that Fenwick is envisioning is exactly the right strategy and that it should have happened a long time ago. The source was less sure that investors would let Dow Jones execute it.

“It’s a long-term project and they have a short- or at best a medium-term period to carry it out.”

A short time to sink or swim

Dow Jones and the rest of News Corp’s publishing assets, which also include Harper Collins and UK newspapers, are expected to start life as a separate corporation on June 28 while the old company’s rich cable and broadcasting assets go their own way as 21st Century Fox Corp.

The new News Corp (the name is the same) will start out with a healthy pile of cash and protection from raiders, which means it will fare better than Time Life — whose parent company, Time Warner, plans to toss it from the corporate nest with a rock around its neck. But the overall weakness of many News Corp assets, including the money-bleeding New York Post, means Dow Jones will have to deliver as a profit center sooner than later.

As of 2011, Dow Jones pulled in only 1.5% of the $25 billion spent globally for data and market analysis. This figure, which comes from a study cited by the Economist, compares to more than 30% market share for Bloomberg and Thomson Reuters.

The good news, then, is that Dow Jones has a potentially enormous market in which to grow. The more sobering news is that, if the company can’t execute, it will be using tech not to consolidate its products but to sell them off instead.

Last summer, the news organizations published stories that described the billions in wealth held by the family of the Chinese premier. In response, China shut down the Times’ Mandarin news service, blocked its English website and denied visas to journalists. The government also blocked Bloomberg‘s consumer-facing websites, bloomberg.com and BusinessWeek – a block that remains in place today.

Speaking at the Google Big Tent event in Washington on Friday, Bloomberg’s Chief Content Officer, Norman Pearlstine, explained the decision to publish.”We would lose our credibility [if we didn't],” said Pearlstine. He added that, in China, “information is perceived as belonging to the state” and said he doesn’t anticipate this view changing in the near future.

Bill Keller, a former editor-in-chief and current columnist for the New York Times, echoed Pearlstine’s views that news publishers can’t rationalize censorship by saying they would lose money and influence in China. ”They can make life miserable for you,” Keller said of the Chinese government, adding that “this will cost money.”

There may, however, be a bright side to being shut out of China. According to Keller, many Chinese are aware that the Times and Bloomberg deliberately took a financial hit to preserve their brands — and in the long run, this will earn them loyalty and trust.

Keller and Pearlstine spoke on a panel with media executive Mark Whitaker and Google’s Chief Legal Officer, David Drummond, at a Google “Big Tent” event about security and free speech in the digital age.

This shift in behavior helps explain Bloomberg’s decision to update its iPad app this week to include deeper research layers and the company’s messaging system which is popular at elite financial firms like Goldman Sachs. Bloomberg said it used eye scanners and heat maps to design the new app, which looks like this:

A Bloomberg spokesperson said the iPad app has been “by far the fastest growing platform” among its subscribers, who each pay around $20,000 for an annual license. In the past, most Bloomberg users licensed a hardware terminal (“the Bloomberg box” — see a 1996 version below) but now two thirds of them opt instead for “Bloomberg Anywhere,” which lets them log in to various devices though a portable finger-print reader.

John Waanders, the Head of Bloomberg Mobile, said the company has been on BlackBerry since 2001 and then expanded to early mobile devices like pagers and WAP browsers. Since then, it has added a Twitter feed and an app store that features an app called “Angry Bonds.”

In the last few years, Waanders said traders have come to seek out the “lean back” experience associated with tablets, and that 38,000 of them are using the iPad app. This represents a little over 10 percent of the company’s estimated 313,000 global subscribers.

Bloomberg would not comment on the ratio of Apple to BlackBerry users among its customers but said that 50 percent of Bloomberg mobile users accessed the service on more than one device.

The company is owned by the mayor of New York City, Michael Bloomberg, and competes with Thomson Reuters to provide financial information to the financial sector.

Clarification: an early version of this story said 80% of users subscribe to “Bloomberg Anywhere”; the number is two thirds.

The new feature, which Bloomberg announced on Tuesday, comes after the Securities and Exchange Commission updated its disclosure rules to say that public companies can now reveal important news on social media platforms like Twitter and Facebook.

For practical purposes, Bloomberg’s decision means traders will not have to monitor a separate screen to watch for companies or executives that announce news on Twitter. While most market-moving news still arrives by way of traditional news wire agencies or official websites, social media sites are becoming an increasingly important tool for distributing such information.

The SEC’s rule to allow social media disclosures comes after an investigation into Netflix CEO Reed Hastings’ decision to share relevant corporate information through a Facebook post.

Under the new rule, public companies that want to use social media platforms for market-moving news must first tell investors that they are doing so.

In a short order issued on Thursday, the Court of Appeals for the Federal Circuit granted the media groups fifteen minutes to participate in a hearing scheduled for March 26. The groups also include Bloomberg, the Washington Post, Dow Jones and the First Amendment Coalition.

At the hearing, the tech companies will ask the Federal Circuit to overrule a lower court’s order that granted the media companies’ initial request to unseal various filings in the patent dispute. The documents are significant because they are likely to disclose sales and revenue figures that Apple and Samsung would prefer to keep secret while they hash out damages figures related to a massive $1 billion jury verdict.

Although court filings are public, companies sometimes ask to file confidential information under seal. In recent years, however, Apple has asked to seal documents on a nearly routine basis, which led the Reuters news agency to mount a successful court challenge this summer.

The controversy over the sealed documents has led other news agencies to take an interest in the issue. The media outlets’ participation at the upcoming hearing is likely to draw more attention to the Apple-Samsung documents, an unwelcome development for the companies.

This week’s order is below. Here’s the full list of media outlets who signed the application to attend the hearing: the New York Times, Bloomberg, the Washington Post, Gannett Co., Dow Jones, the First Amendment Coalition, Reporters Committee for the Freedom of the Press, the Society of Professional Journalists, and the American Society of News Editors. The filing was first spotted by Reuters.

Fed Circuit Grants NYT Permission to Intervene in Apple Samsung

Alas, Angry Bonds is not about disgruntled 007 agents. Instead, it is one of more than 45 apps in the Bloomberg App Portal that perform tasks like risk analysis and client management. The company didn’t disclose specific prices for the apps, which are free to preview, but it’s a safe bet they cost more than 99 cents. The Financial Times reports that Bloomberg will, like Apple, take a 30 percent cut.

The launch is significant because Bloomberg has now opened up its vast pool of financial data to outside developers who can then craft new products to help traders and analysts. Until now, the company founded by New York City mayor Mike Bloomberg has closely guarded its proprietary system, which costs around $20,000 a year for a license.

The app store comes at a time that Bloomberg is adopting its famous financial terminal for the mobile environment through tools like Bloomberg Anywhere and selling a new edition of its core product, Bloomberg Next. The company and its main competitor Thomson Reuters were hard hit by the economic meltdown in 2009 that decimated many of their financial clients.

Here are some more screenshots of the apps (don’t have too much fun…)

Yet, the company did just that after a federal judge ruled that Bloomberg is entitled to record and sell corporate earnings call without permission.

Swiss-watch maker Swatch sued last year over Bloomberg’s practice of providing subscribers with transcripts of its earning calls. These are public calls on which corporate executives tell investors and reporters about performance and strategy.

Bloomberg asked the judge to throw out the case because the recording was a form of fair use. Fair use is a legal defense that allows people to use copyrighted material for purposes like reporting or scholarship.

In December, U.S. District Judge Alvin Hellerstein agreed with Bloomberg that the calls were fair use but gave Swatch more time to persuade him that there “material facts” that deserved a trial.

Swatch came up short last week after Hellerstein found that “What we have at best is a thin copyright” that didn’t deserve copyright protection.

To determine whether something is protected by fair use, courts use a four factor test that balance the rights of the author against the value of the use. Ordinarily, someone will run into trouble under the test if they use a whole work for commercial purposes as Bloomberg did.

But Hellerstein decided that the value of Bloomberg’s news reporting outweighed Swatch’s “thin copyright” and threw out the case.

Here’s a copy of the decision:

Bloomberg Fair Use Copy
(Image by dedMazay via Shutterstock)

The New York Times recently ran an exclusive exposé about Walmart and bribery allegations in Mexico, a story that helped to shave about $16 billion from the retailing giant’s market value over the past few days. For Reuters blogger Felix Salmon, that sparked an idea: why not sell early access to that kind of story to customers who might want to pay for it — say, hedge funds who could trade on the information? After all, he argued, Reuters and Bloomberg have a huge business providing financially sensitive information to paying clients. But is that really the kind of game the New York Times wants to start playing with the news?

The proposal seems to have a lot going for it, at least for a newspaper that is seeking whatever new sources of revenue it can find in the wake of a continued decline in advertising revenue. In its latest financial report, the New York Times said that not only did print advertising fall, but digital advertising did as well. Revenues from the newspaper’s subscription plan or “paywall” are substantial and growing, but not substantial enough to make up for the shortfall — and it’s not clear when they will get to that point, if ever. Perhaps selling early access to stories is one solution?

Should hedge funds get an early look at important news?

Salmon points out that this is the same kind of thing that newswires such as Reuters provide for their enterprise customers: early access to information that matters to them, and for which they are willing to pay a lot. The Wall Street Journal and the Dow Jones wire are two parts of a similar business in a lot of ways — some customers get access to the news on the wire earlier than it appears in the newspaper or online. So why shouldn’t the New York Times get in on some of that action?

[H]ow much would hedge funds pay to be able to see the NYT’s big investigative stories during the trading day prior to the appearance of the story? It’s entirely normal, and perfectly ethical, for news organizations, including Reuters, to give faster access to the best-paying customers.

I had a fairly negative initial reaction to this idea, which I posted on Twitter — and an excerpt of the debate that ensued between Salmon, me, Emily Bell of the Tow Center for Digital Journalism at Columbia and John Gapper of the Financial Times (among others) appears below. For me, the idea of giving hedge funds preferential access to market-moving information seems wrong somehow, especially the idea that they would get access to these stories a day ahead of regular readers (many of whom pay for the paper). Would it be different if it was a few minutes, or an hour? Perhaps.

John Gapper said that if regular readers don’t value scoops, which many believe to be the case, then there should be nothing wrong with selling access to those who do value them. Others who debated the issue with me argued that media outlets like the New York Times are damned if they do and damned if they don’t — they get criticized for putting up paywalls and doing other things to try and monetize their content, but unless they can come up with new models their business appears to be doomed.

Does the news not have public value as well?

Just to be clear, I am all in favor of media companies like the Times trying new ways to monetize their content, including packaging it in different ways — e-books, PDF downloads, proprietary research reports like those the Economist and others (including GigaOM) offer, and so on. I’ve written about what I think the new CEO of the NYT should do, and most of those things were included in my prescription. And if we’ve learned anything from the music business, it’s that preferential access to music is something that fans will pay for. So why not preferential access to the news?

One of the things that bothers me about this idea is that I think there is still some kind of public-service or public-policy value in journalism, and especially the news — I don’t think it is just another commodity that should be designed to make as much money as possible. And if the New York Times were to take stories that are arguably of social significance and provide them to hedge funds in advance, I think that would make it a very different type of entity than it is now. What if it was a story about a dangerous drug or national security?

Maybe doing that would be more lucrative, and perhaps the future of broad, general-interest news vehicles is so unhealthy that they will all have to become controlled-circulation newsletters for the wealthy, with some free content provided almost as an afterthought. That’s effectively what Rupert Murdoch’s hard paywall at the The Times has done to that newspaper. Reuters and Bloomberg are somewhat different because they were created specifically to appeal to institutions, and started providing news to the public as a by-product.

That is not what people think of when they think of the New York Times — but perhaps it will be in the future. Will that be a good thing for the NYT, or for society in general? I honestly don’t know. Here’s the Storify with the conversation between Salmon, Emily Bell, John Gapper and I:

[View the story "Should the NYT monetize its scoops?" on Storify]

Should the NYT monetize its scoops?

Storified by Mathew Ingram · Tue, Apr 24 2012 17:32:25

Post and thumbnail images courtesy of Flickr users Zert Sonstige and jphillipg