When we started working on Riptide last winter, we hoped it would be a future resource for researchers and reporters alike trying to understand what happened to the legacy news business when it ran into the digital revolution. We had no idea it would be used so soon, but we’re glad it was available when The Washington Post set out to explain why Don Graham decided to sell the paper to Jeff Bezos this summer. When Graham declined to give an interview to his own paper, reporter Steve Mufson turned to Graham’s interview in Riptide.

As Jeff Bezos prepares to take over, a look at forces that shaped The Washington Post sale

By Steven Mufson, Published: September 27

On April 4, Donald E. Graham sat for a videotaped interview about how the Internet and digital technology had hammered and transformed the news business. Cradling a coffee cup emblazoned with the word “Washington,” Graham sat next to his desk, with three Herblock cartoons on the wall behind him and a photo of a young Warren Buffett on the table next to him.

Graham gave a classic performance, telling stories of bygone times in his disarming aw-shucks manner, dispensing compliments to colleagues and rivals while mixing in his sober, analytical view about the reporting-intensive newspaper business — and his failure to come up with a way to sustain it

“One of the questions that faces places like the [New York] Times and The Post is: Is there any kind of a plus to a news organization in having really high-quality reporting and editing?” he said at one point. “I’m pretty sure the answer to that is yes, but we have not figured it out.”

He added, “If somebody said to me there’s a way out for newspapers, but you’re going to have to lose $100 million a year to get there four to five years from now, I would sign up for it in a minute.”

But no one said that to him and unbeknownst to the three veteran journalists interviewing him that day for Riptide, a journalism history project at Harvard University’s Shorenstein center, Graham was trying to figure his own way out — of the daily newspaper business. Quietly, he was shopping around for a buyer, one without a political agenda but also one with a sense of stewardship about the paper — and pockets deep enough to buy the franchise and cover losses if necessary.

Amazon founder and chief executive Jeffrey P. Bezos ultimately agreed to buy the paper himself for $250 million, also acquiring El Tiempo, Express, the local Gazettes, and Robinson Terminal, including Robinson’s 23 acres of undeveloped land in Charles County, Md.

You’ll find Mufson’s entire story here.

We spend a great deal of time in the Riptide interviews and essay looking at what’s been called the Original Sin of the news business. That is, when news business owners (mainly newspaper and magazine publishers) decided to give their content away without charge on the Web. Our conclusion: It didn’t really matter because a few other entities with very different business models (namely Reuters and Yahoo) did it anyway and disrupted the news business. Recently, I had a chance to re-read Dick Tofel’s marvelous essay on the same collision of the news business and digital technology, and I was reminded that he presents a somewhat different take on this question, and it’s worth reading.

(Semi-Serious Disclosure: You have to buy it for $1.99 on Amazon, because Dick’s not giving this I.P away for free! Fully-Serious Disclosure: Dick and I work together at ProPublica where I’m on the board and he’s the President.)

Mathew Ingram’s thoughtful article in paidContent on this project raises the question of whether we, the authors, seek to absolve industry leaders (and, by extension, ourselves) of responsibility for the sad state of economic affairs in much of journalism today. By calling the project Riptide, he asserts that we are likening what happened in the news business to a “a powerful and largely unforeseen force.”

This gets right to the essence of the project, for Riptide is not a history of journalism, or even web journalism, but an inquiry into “what really happened” when digital technology met journalism starting almost 35 years ago. As Ingram points out we spoke to the business leaders of many of these institutions, as well as some of the disruptors. And by naming the project Riptide, Ingram correctly asserts that we’ve concluded that the Internet is a kind of force of nature, just as the industrial revolution was in the last great transformative era. Buggy manufacturers did not fare well.

In his 2009 essay, Newspapers and Thinking the Unthinkable, Clay Shirky wrote, “Society doesn’t need newspapers. What we need is journalism.” We wholeheartedly agree with this. But as large metro newspapers (among other news businesses) continue to decline, we have not yet seen a financial model that can support the robust reporting and editing – the journalism – that these communities require. Julius Genachowski, former FCC Chairman, mirrors this view in his interview with us.

The case of Knight Ridder is an excellent example. Knight Ridder first invested in interactive technology in the early 80s, when it fielded the largest videotex service in the U.S. It developed the first newspaper R&D lab under Roger Fidler, who we interviewed. It invented the Mercury Center and became the first news provider on AOL, before Mosaic. Knight-Ridder was among Netscape’s first customers. It followed the advice of Clay Christensen and broke out a separate digital operation under Kathy Yates, who we interviewed. It was a driver behind CareerPath, and after that failed, worked with the Tribune Company to create two highly successful real estate businesses — CareerBuilder and Classified Ventures. Despite all of this, the company no longer exists. (It was sold to McClatchy in 2006.)

Ingram correctly points out that Kathy Yates grew frustrated with the newspaper culture and eventually moved on to pure web startups, including women.com and CBS Marketwatch. And maybe this was due to a failure of leadership or imagination on Tony Ridder’s part, just as it may have been Don Graham’s failure at the Washington Post that lead to its recent sale to Jeff Bezos for $250 million.

We don’t think so. Instead, we believe that the underlying economics of the web are simply so different than the economics of analog media, that Jeff Zucker’s “analog dollars to digital pennies” (later updated to dimes) notion is the essential animating force of the Riptide.

But, as important, we are not nostalgic for the past. As Genachowski also points out in his interview and an important FCC report, the entrepreneurial community is hard at work innovating in all aspects of journalism, including local and regional reporting. To varying degrees, we all believe that solutions will eventually be found. But as we point out at the end of our essay, that will come after a long process of creative destruction.

In any event, we appreciate Mr. Ingram’s serious contribution to the debate.

We started by identifying the institutions that we believed were central to the Riptide story — the change of news through the rise of digital technology, beginning around 1980. Then we sought to interview many of the key people at those institutions. At that time, they were, regrettably, overwhelmingly white and male.

Riptide was always intended to be an organic project that would be expanded over time with other voices exploring more and more parts of this story. That’s why we created it as a website. We welcome suggestions for voices or topics that could now be added to Riptide. Please feel free to post them below or send them to us here.

When we embarked on the exploration that became Riptide, John, Martin, and I knew that how the news gets paid for and the evolving need for readers to pay for the news they consume would be a central theme. Even as we asked a few early readers to comment on the site, we got feedback on this issue — including from a newspaper publisher in Chicago who also happens to be my dad. Here’s what Bruce Sagan, longtime publisher of the Hyde Park Herald, had to say:

Thank you for this important and fascinating history of journalism and the Internet revolution. Or should I say, ‘Internet Tide?’

Your remarkable essay ends with the questions we are all asking: ‘What is going to happen next to the news business…?’ ‘How will accountable journalism be provided to a democratic republic?’ (We can assume that celebrity journalism will take care of itself.)

Among the commentaries from your interviewees, perhaps Tim Berners-Lee shows the way. We need, he says, a new payment protocol. We need an easy way to send money from the reader to the creators of accountable journalism.

His idea was along the line of voluntary action by the reader. That is probably an unreliable way to build a self-sustaining journalism enterprise. But if there was a new payment protocol that allowed easy payment for subscriptions, or a single copy or a single story (essentially the much-discussed idea in the industry of micro payments), readers could and would support the journalism they want.

It could be argued that the reader has always supported journalism with payment. The traditional view of newspaper economics has been that the reader paid a small fee and the advertising subsidized the journalism and the operation of the publishing company. But if you pull apart the operation of most newspapers in America, you can give a different kind of description.

At most American daily newspapers in the glory days before the web, the editorial budget represented only about 15 to 20 percent of the costs of operations. Thus 80 to 85 percent was spent on production, distribution, selling advertising, administration, etc. In most cases, the gross circulation income paid by the reader covered the cost of the journalism effort. The advertising paid for the ink and paper and trucks and production and distribution personnel.

And so all we need now is a system to create journalism that gets it to the reader without paper, ink, trucks, retail sellers, etc., and have the reader pay us the small amount they have always paid for their journalism. With that we probably do not need advertising to help us along.

Well, we know how to do the first part¬–something called the World Wide Web. The second part is a little more difficult, getting the reader to pay us. But we are learning how to do that. There needs to be a cultural shift; society must accept that payment has to be made for all kinds of news. News is not free.

And there will be a fierce fight over ‘fair use’ as the aggregators and the originators of content try to define copyright for another web abused industry.

But millions of Americans spend about a $1.00 a day or more on journalism products. Granted, they are not all looking for accountable journalism. Would many pay for accountable journalism on the web if it were required and easy?

Let us use your wonderful essay, Riptide. Here is a piece of real web journalism, a long form story about a very import issue in our society. It is well researched and it uses the web in its most inventive way, making it possible for me to dig deeper into the story itself by just clicking on a link (or many, many links) to find out more. Your story itself is an example of what web journalism can be.

And let’s assume that you are part of a journalism site and that it has subscribers who are interested in what this site produces. They pay for part of the cost of maintaining the news staff.

If I was not a subscriber to your news site but was told about the story by a friend (which would happen to me as I am a practicing journalist), and if I could get the story through a simple and easy payment protocol, would I pay a fee for it? And how many thousands are there like me and how much would that add to the income of the newsroom?

What if we had a system of subscribers, plus purchaser’s of just today’s ‘paper,’ plus the sale of an individual story. Could that support a local newsroom that covered city hall and read the school budget or maintained that proverbial ‘bureau in Baghdad?’

Time to find out. We need that new payment protocol.

(Maybe we should talk to the Department of Motor Vehicles in states that run toll roads. They seem to know how to get dimes and quarters and dollars from us in an automated and painless way. Journalism needs its E-Z Pass.)

Bruce Sagan, Publisher, Hyde Park Herald, Chicago, Illinois.

Even before releasing Riptide we heard from a number of people who felt that we missed particular players in the evolution of digital news. We explain in Riptide’s “About” section that we did our best to cover a lot of ground in only three months, the term of our Fellowship. We freely admit that we couldn’t cover everything and everyone. In part, that’s why we built Riptide on the web. We hope that others will fill in the blanks and update the corpus as new events occur. The IAB’s Randall Rothenberg, who interviewed Sir Martin Sorrell for us, was particularly concerned about our having neglected to interview anyone from Bloomberg. His post, below, explains why:

“Riptide” is an important contribution to the history of the practice of journalism, the business of news, and the effects of media — but it’s only a first step. I hope you go further, and explore some roads that were not on your early map.

For example, I believe you erred by ignoring the role Bloomberg played, especially as a test of the proposition you assume to be true but never explore in your document: Does news indeed have objective value?

The lack of attention to that question is, I think, a flaw in this first draft, as well as in the thinking of many news industry executives. It’s implicit in many of the “Riptide” interviews: Journalists and journalism executives believed news was valuable because news companies had always made money. Therefore, none of them felt compelled to investigate this fundamental presumption.

Bloomberg actually presented a controlled market test of this question. For many, many consumers, Bloomberg was their first taste of what later came to be called the Internet. Granted, it was a private network. But it offered them many of the benefits the IP-based Internet later would offer the world: copious information, services, email, community, community connectivity, and massive lollygagging opportunities. It was also the first large interactive company to offer a test of the value of news to paying customers — the first place where the value of news wasn’t just a matter of received wisdom or ideology, but a business proposition.

I realize Bloomberg was not a perfect test of this principle, by any means. They weren’t charging independently for “the news”; instead, it was an add-on to the company’s analytics services. But Mike Bloomberg, Tom Secunda and the other early Bloombergians felt the news was so essential to the company’s business that when Dow Jones threatened to pull DJNS off the Bloomberg terminals, they thought they had no choice but to start their own news service.

It’s also not a perfect test of the value of news because Bloomberg’s market was a B2B market; they believed their customers required the news because they made money from it. (Bloomberg was where I learned that beating the competition by a half-second on the news of a Bundesbank interest rate change could be worth hundreds of millions of dollars to your customers.) But the same would be true of the Wall Street Journal and the Financial Times, and you’re not segregating them out of your narrative simply because they are business-news companies.

Net, I think Bloomberg was a crucial piece of the evolution of the Internet and news. Bloomberg provided a test of the value of news to an important consumer/customer base; it was an experiment launched by non-news people in a non-news company; and their test helped them in some way to grow to become one of the most valuable and influential companies in the news and information business. What did they learn, and is it more broadly applicable to journalism? Therein I think is an important part of this tale — the next phase of “Riptide.”

When we created Riptide as Fellows at Harvard Kennedy School’s Shorenstein Center, we wanted to find out “what really happened” between the moment online services were first introduced into journalistic institutions in the late 1970s to today, 35 years later. We spoke to over 60 people who made the decisions and worked in the institutions that were a part of the digital disruption that we’re now so familiar with. Our hope is that Riptide will provide insight into the history of digital journalism; but as important, we hope that it will inform its future.

The Riptide blog is way to keep the conversation going. Frankly, we don’t know where this will lead. The three of us will post here, and we’ll invite others to do so, too. Our very first post, by the IAB’s Randall Rothenberg, argues that we made a mistake in not interviewing anyone from Bloomberg for the project. Bruce Sagan (Paul’s father), a prominent Chicago newspaper publisher, writes about business models in our second post. These posts represent just the kind of conversation we hope to continue to engender going forward.

Please feel free to reach out to us with questions and comments. You can reach any of us from the About page or all of us from the Feedback page.