Henry Blodget’s Riptide interview is one of my favorites. In a sea of mostly negative prognostications about the future of quality journalism, Henry stands almost alone as an unrelenting optimist. His argument, simply put, is that in a pre-Web world of distribution constraint, quality content was “like a hydrant in the desert.”  Few people had access to the means of production and those who did worked for companies with access to distribution. Choice was limited so producers had great leeway in product development. The Internet changed all that, providing a global distribution network and unleashing easy-to-use publishing tools like this one. As a result, says Blodget, quality content now flows like a “hydrant in the ocean.” We are awash in news from an almost infinite number of global sources, much of it of very high quality. For this reason, news providers can no longer force their readers to “eat spinach.” Instead, they need to work hard to entice readers with relevant and interesting content, structured for easy access. In a world of almost unlimited choice, the reader is king.

I wasn’t surprised, therefore, when Henry tweeted enthusiastically about Thomas Baekdal’s provocative piece entitled, “What if Quality Journalism Isn’t.” Baekdal uses the recently leaked New York Times Innovation Report, the first newsroom critique of its own digital practices, to question the core assumption that many in journalism, including the writers of The Times report, make: that the problem is not with the journalism, per se, but rather with the lack of digital savviness or competency in pushing it out to the public. In other words, according to Baekdal, The Times and others need to be far more self-reflective regarding core journalistic practices. Baekdal suggests that newspapers like The Times still employ a “supermarket” approach to the news in an era when “intent” (Amazon and Google) and “interest” (Facebook) provide more relevant, compelling and entertaining choices at much lower cost. Hence, newspapers like The Times publish a lot of stuff, but only a small sliver is of interest to any given reader. In short, it’s journalism for the pre-Internet age.

This argument brings me back almost 20 years, to the winter of 1995, when I was interviewing with Arthur Sulzberger to lead the unit that would be responsible for launching The Times web site. As I said in my Riptide interview, my feeling at that time (and today) was that “quality” was – in large part – a function of the user experience, and that – particularly in the dial-up world of the mid-90s – Yahoo was doing that best for exactly the reasons that Baekdal outlines. Putting a newspaper on the web seemed very limiting to me. I understood that The Times wanted to put its content online, but I had proposed that we set-up a separate R&D unit to develop something more genuinely native to the web. In my budget for 1996 (perhaps the most seminal year in digital media history), I had proposed an investment of roughly $3.5 million to both launch the web site and establish my skunkworks. The CFO at the time was adamant that we reduce our investment and announced to the gathered group that I was costing the company “a-penny-and-a-half per share.” For a decade hence, I was known on the executive floor as “Mr. Penny-and-a-Half.” Needless to say, the web site launched in January 1996, but the development team was killed.

Fast forward two decades to Thomas Baekdal’s critique. As I wrote recently in this blog post, newspapers have mostly followed what Clay Christensen describes as a “sustaining” approach to the web. For the most part, newspapers publish journalism almost exactly the way it appears in their print editions and surround it with advertising. In many cases now, they charge for it on a subscription basis, replicating the print business model. I’m not sure this is a bad thing.  At The Times, almost two million people now pay for the journalism, either in print, in digital, or in a majority of cases, for both. Every day, I find so much in The Times of interest that I literally do not have enough time to read it all. In contrast with Thomas Baekdal’s analysis of his interest in newspaper content, mine is that almost all of it is of keen interest. I suspect Baekdal’s reaction is much more typical than mine, particularly for the vast majority of newspapers. But The Times has never been a mass market product. And the journalism will evolve as digital ascends and print goes off into the sunset. In the end, The Times will succeed or fail based on the number of people like me who passionately embrace it. They are the only ones who matter. Arthur Sulzberger said as much in his Riptide conversation with Paul Sagan and me last year.

In retrospect, I’m not sure that my skunk works would have amounted to much given the culture of the institution. At one point early on, Steve Rattner, who was at Lazard at the time, even suggested we might acquire Yahoo. Imagine that. I’m pretty sure we would have ruined it.

My first post on the excellent New York Times article about business model disruption at the Harvard Business School compared the School’s attempts to sustain its existing economics with similar attempts at high-end newspapers like The New York Times and the Wall Street Journal. HBS has chosen to pursue what Professor Clay Christensen refers to as a “sustaining” approach, similar to the strategies followed by several large newspaper companies. In his tweet in response to my post, Jonathan Glick asked the question: “Is HBS the next NYT?”

This question is exactly right. What I didn’t mention in my first post is that educational institutions like Harvard and newspapers like The New York Times depend, in part, on a kind of symbiotic relationship between talent (employees) and these very prestigious institutions. When we think of Michael Porter, we think of the Harvard Business School, and vice versa. Similarly, when we think of Tom Friedman or Maureen Dowd or David Brooks, we think of The New York Times. Mention Bob Woodward and the Washington Post immediately comes to mind. Historically, the institution bestowed its prestige on people like Porter, Friedman and Woodward and, in turn, their identities grew together. In this context, the “talent” would almost always remain with institution until retirement, and in many cases even after, in a kind of emeritus status.

Interestingly, in The Times article, the Dean of Wisconsin’s business school, Francois Ortalo-Magne’, addresses this issue head-on:

Recently, a rival school offered one of his faculty members not just a job, but also shares in an online learning start-up created especially for him. “We’re talking about millions of dollars,” Mr. Ortalo-Magné said. “My best teachers are going to find platforms so they can teach to the world for free. The market is finding a way to unbundle us. My job is to hold this platform together.”

To that end, he has changed his school’s incentive structure, which, as in most of academia, was based primarily on the number of research articles published in elite journals. Now professors who can’t crack those journals but “have a gift for inspiring learning,” he said, in person or online, are being paid as top performers, too. “We are now rewarding people who have tenure to give up on research,” Mr. Ortalo-Magné said.

Mr. Ortalo-Magné spins out the possibilities of disruption even further. “How many calculus professors do we need in the world?” he asked. “Maybe it’s nine. My colleague says it’s four. One to teach in English, one in French, one in Chinese, and one in the farm system in case one dies.”

What is to stop a Coursera from poaching Harvard Business School faculty members directly? “Nothing,” Mr. Nohria said. “The decision people will have to make is whether being on the platform of Harvard Business School, or any great university, is more important than the opportunity to build a brand elsewhere.

“Does Clay Christensen become Clay Christensen just by himself? Or does Clay Christensen become Clay Christensen because he was at Harvard Business School? He’ll have to make that determination.”

This gets at the very heart of institutional coherency (“unbundling”) and is, in my view, the fundamental question that newspapers face as well. It’s true that the Economist has mostly never used bylines. This is the most extreme example of “the brand” subsuming all of the talent in the organization. But that’s an anomaly. In almost all of journalism “stars” are major attractions. Last year, we saw Walt Mossberg and Kara Swisher take their AllThingsD team out of the Journal and almost instantly create a new brand around them called Re/code. I was told by an insider that their recent conference – the first under the new brand – sold out in 45 minutes.

This fundamentally changes the balance of power between institutions like Harvard and the Journal and the “talent” they depend upon to sustain their models. The “talent” now holds the power, and as Mossberg and Swisher prove, a new brand can be built overnight on the web. Perhaps Re/code is sui generis, but just as in academia, these fissures have only just begun to appear in journalism. We haven’t seen a wholesale rush of “star” talent out of places like The Times and the Post, despite high profile moves by the likes of Nate Silver and Ezra Klein, respectively. Nor have we yet seen it in academia.

But the two have striking similarities. And if the “sustaining” approach to their business models has a point of vulnerability, this is where it is in a post-advertising, consumer paying world. David Carr, himself an example of the phenomenon I’ve outlined above, wrote on all of this in his Times Media Equation column about Medium, the blogging tool:

I’ve always been struck by how digital disrupters care deeply about the quality of content that lives online. Even as they helped destroy the business model of traditional publishing, Steve Jobs of Apple, Eric Schmidt of Google and Craig Newmark of Craigslist were always harping on the importance of offering significant content that would enlighten readers.

I personally found Carr’s column to be ahead of itself with respect to Medium’s success. Good for Ev Williams for having charmed him. But fundamentally all the pieces are there. And despite Carr’s words about the traditional business model, that’s still where he earns his living. When Carr, Dowd and Brooks start earning their daily bread from Medium, we’ll know that the fissures have turned to earthquakes.

The New York Times is running a brilliant article today about the Harvard Business School and the emerging Internet technologies that might destroy its business model. In it, the authors turn to two HBS professors, Clay Christensen and Michael Porter, for views on how the School should transition to the digital age. Christensen, characteristically, argues that HBS exists at the high end of the market, and will eventually be destroyed unless it sets-up a separate digital operation to compete against the new companies seeking to disrupt its model. Instead, Harvard has elected to set-up a complementary business, one that is designed specifically not to disrupt the existing model. Their online approach, called HBX, is a kind of elite “Pre-MBA” seeking to teach liberal arts majors the basics of business. About this effort, Christensen says:

“What they’re doing is, in my language, a sustaining innovation,” akin to Kodak introducing better film, circa 2005. “It’s not truly disruptive.”

The HBX approach was championed by another HBS professor, Michael Porter, also very famous but less frequently mentioned by those living through disruptive innovation. Porter argues:

“I think the big risk in any new technology is to believe the technology is the strategy. Just because 200,000 people sign up doesn’t mean it’s a good idea.” Though Professor Porter published “Strategy and the Internet” in the Harvard Business Review in 2001, before the advent of MOOCs, the article makes his sternest warning about the perils of online recklessness: “A destructive, zero-sum form of competition has been set in motion that confuses the acquisition of customers with the building of profitability.”

The Dean, Nitin Nohria, seems to have sided squarely with Porter. He tells The Times:

“I do not believe our M.B.A. program is at risk.” He concluded that disruption is not always “all or nothing,” and cited the businesses of music and retailing as examples. “In the music business, all record stores are gone,” he said, while in retailing, “it’s not like Amazon has eliminated everything; after those debates, my feeling was that we’re going to be more in that category.”

This argument played out throughout our Riptide interviews. Almost everyone we interviewed mentioned Clay Christensen and his ideas when discussing their own experiences with digital journalism. Interestingly, no one mentioned Porter, and in hindsight and with the benefit of this article, I wish they had. As Nohria states, it really isn’t “all or nothing.” But that naturally begs the question: are newspapers more like record stores or retailers?

The Riptide hypothesis is: Both. As we suggested repeatedly, the journalism is greatly sustained by the web and associated digital technologies. Never before have so many people around the world experienced, and enjoyed, New York Times storytelling. But the advertising is like record stores. Classified advertising, and – increasingly – high-end display have experienced a “dollars to pennies,” value destruction, to quote Jeff Zucker. That’s what makes the business of quality journalistic transformation so difficult to manage. You are managing both disruptive and sustaining situations at the same time.

Ultimately, The Times, the FT and the Wall Street Journal seem to have chosen the Michael Porter path. They’ve created high-end, sustaining extensions of their core models and priced them to largely complement one another. This is in sharp contrast to the “digital first” methodology followed by CEO John Paton at Digital First Media. Admittedly, the road is much tougher for large metros like Paton’s, stuck in their local markets and unable to attain the kind of global scale of the New York Times. But in the end, either The Times and others following the sustaining path will be like the specialty retailers able to thrive among the behemoths, or like record stores, pulled under by the Riptide.