Star Tribune CEO Mike Klingensmith talks new paywall, digital re-do

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First of two articles

Mike Klingensmith is no rocket scientist, just the son of one. The new Star Tribune publisher/CEO’s dad was an aeronautical engineer for Honeywell in Minneapolis during the Apollo era; the son faces a challenge nearly as knotty as sending man to the moon: find a business model that can turn a recently bankrupt paper into a thriving digital-era operation.

In terms of smarts, the apple didn’t fall far from the tree. Klingensmith, 57, earned a B.A. and M.B.A. from the intellectual home of Saul Bellow and Milton Friedman, the University of Chicago; there, he and future Obama aide David Axelrod worked together for the student newspaper. Time Inc. hired Klingensmith out of school, and he eventually became Entertainment Weekly’s co-creator, Time magazine’s business boss, Sports Illustrated’s president and, finally, a corporate executive vice president.

Unlike Strib board chair Mike Sweeney, an extroverted Philadelphia native who enjoys mixing it up with rivals such as MPR, Klingensmith is more of a classic Minnesotan: more introverted, more self-deprecating, but clearly confident of his skills.

When I met him at his downtown Minneapolis office Friday morning, Klingensmith’s conference table sported these accouterments: a print New York Times, a print Wall Street Journal, an iPad, and a brochure for Press+, the digital-pay service co-founded by ex-Journal publisher and Star Tribune board member Gordon Crovitz.

I’ve broken our hour-long interview into two parts; today’s installment covers Klingensmith’s paywall plans and the coming re-do of the website and smart-phone apps, as well as how his professional experience could shape the paper. On Wednesday, we’ll dive into the Strib’s financials, the CEO’s role on the editorial board, the Vikings stadium, and who really owns the newspaper.

One conflict-of-interest note: Klingensmith and Star Tribune board chair Mike Sweeney recently donated $600 to MinnRoast, MinnPost’s annual fundraiser held in late April.

Feed the meter
David Brauer: You’ve been an advocate of metering. Basically, publishers can set a certain quantity and/or type of story that’s free, and if readers want more, they pay. Can you paint a picture for readers of what you think it will look like?

Mike Klingensmith: The picture I’d paint is that with metering, you have a lot of dials that you can turn, and you can determine to what extent you want to [be free] versus behind [pay]walls.

For example, things you can turn the dials on can include geography [reader location]. Or types of stories — maybe you want your Associated Press content to be available for free, but not your proprietary content.

And you can certainly control who has access. No matter what we do, a tenet will always be that our paying print subscribers will have full access to anything we create. In that regard, I’m not a proponent of a la carte pricing, but having it be inclusive with your paid relationship with us.

DB: The paid Access Vikings experiment happened before you got here, but print subscribers did not automatically have access to that.

startribunecompany.com

Mike Klingensmith

MK: That’s correct. And in my view, that was a mistake.

DB: By charging for online, don’t you risk cutting yourself off from the conversation?

MK: We will clearly want to invite linked traffic, whether it be through the Huffington Post, or Google, or any other number of sources of referrals. We’ll want to have that traffic be able to sample our product and our material for free.

However, the basic learning in this area is evolving that your most loyal customers and your most frequent visitors are also the most willing to pay. So they’ll be a segmentation, and a segment that will be willing to pay for our content.

DB: A segment that is not paying for print that will pay, say, a monthly fee?

MK: Yes. So it’s about parameters, about figuring out how to turn those dials. The good news is, you can re-set those dials after you set them the first time. You don’t have to make “forever” decisions.

It’s all a theory, but one of the great advantages we have is that Gordon is on our board. So through him, we’re able to keep contemporary on what the state of information is in this area.

DB: Have you made a decision to go with his Press+?

MK: We have not made that decision. We’re studying, and it would most likely be on into next year before we’d be willing to commit to one direction or another. That’s because we have to fold this into all the other strategic work we’re doing. It’s not a one-off decision. It’s part of a broader decision about how we go forward.

DB: Are there areas of coverage that you think will be beefed up, in part because of metering or this comprehensive strategy? Are there things like sports, or government news — things that are more likely to cash-flow than other subjects?

MK: Let me put it this way: The other thing that’s been evident in the experience people have garnered from paid models is that, to the extent that your content is uniquely valuable or proprietary, the greater ability you have to charge for it. So the models that have worked, everybody knows, are: Wall Street Journal, Consumer Reports, the Financial Times, ESPN, so that gives you some idea of the kind of content.

Now what we have, in my belief, is the best coverage of local news in the Twin Cities. So that’s our proprietary information. Obviously, there are lots of competitors for that too, but that’s our point of differentiation, so that’s the subject area that we’ll have the most success charging for.

DB: The concern is always, if you charge, and everyone else is free, you lose your readers — and maybe your authority on some level. In other words, what you think is proprietary might not actually be proprietary. The Pioneer Press is probably licking their chops, if they’re not considering doing something similar. Or WCCO. Or Fox Sports North or 1500ESPN or KFAN with their local sports bloggers. Why isn’t that a concern?

MK: It is a concern, and that’s part of how you set the dials. Clearly, we don’t want our content to become a secret. (Laughs.) We want it to be broadly exposed, but we also want to be compensated. It’s not an inexpensive process to create the proprietary content we create, and we have to be compensated for it in the future. As I believe almost all content providers will have to be.

The website
DB: The company’s been very public about the fact that it’s doing a fairly extensive re-do of its website. And what I’ve heard is that that’s also going to come out this year. Is that right?

MK: Yeah. We’re under development; we’re at the beginning stages. But we definitely are going to be committing a fair amount of resources this year to, not redesigning the website — that would be too narrow a definition — but rebuilding it into a platform.

Going forward, certainly, a larger portion of our revenues are going to accrue from digital. A larger portion of our revenues are going to accrue from consumers. And we’re going to have a larger “content tent,” as they say, which is going to include more service content, more user-generated content. That’s in addition to the work of our journalists, which in no way will be de-emphasized; it’ll also be accompanied by content that comes from users and partners.

And then all of that content package will have to be built in a way that can migrate to whatever type of device our consumers are going to want to use. And here, we’re going to follow our consumers in that regard. It’s not for us to dictate; it’s for them to tell us.

So as a very first piece of this, one of the things we’re going to be doing is consumer-based and advertiser-based research. Because historically, I’ve always found it helpful to be informed by … facts and data, as opposed to hunches and suppositions. (Laughs.)

DB: And that research is ongoing right now?

MK: It’s just beginning.

Professional experience
DB: Talk about your career in the context of how you’ll be positioning the Strib, how you’ll be selling the Strib. I’d like to get a sense of “What’s different with Mike Klingensmith in charge, as opposed to anyone else in charge?”

MK: In terms of my background, one of the things I think I can bring to the paper is on the consumer side, I have a lot of experience in consumer marketing in magazines. I think magazines have historically done a broader range of consumer marketing than newspapers have, in areas like direct mail and ways to sell subscriptions and single copies.

The other thing I can bring to the party is the consumer research side of things. Because I think that with newspapers today, you have a much broader permission from the consumers to address and write about and report about a whole range of subjects. So finding out what consumers want from their newspaper and measuring how well we deliver against that today, is valuable to shape a product that has the most consumer appeal.

Part of that is always going to be doing the best job of news, investigative — all those aspects that people come to the paper for. But beyond that, you have a wide range of things you can choose to write about and report about.

DB: You anticipated my concern: That I’m going to end up getting People magazine, right? Which is the most profitable magazine. Or Sports Illustrated, which is the second. I’m not sure I want my newspaper to focus on that.

MK: I’m not talking about just soft subjects, and I’m not talking about abandoning news and journalism whatsoever. So for example, Time magazine does this kind of research. Because even if you’re reporting news, you can choose to cover more business news, more health news, more personal-finance news, more sports news. And, so I’d like to know what our consumers expect from us, and would like from us.

DB: I would have assumed that the Strib would have been doing this research all along.

MK: That would be an incorrect assumption, at least during the last many years. I can’t speak historically; maybe years and years back. Please, don’t make any of this as going away from hard news whatsoever. But we run a lot of pages, and there’s room for a lot of things.

DB: Do you anticipate having a larger staff of news-gatherers by, say, 2011?

MK: It’s hard to say. I would say I certainly hope we have no smaller staff than we do today. Part of that is purely going to be a function of economic realities. Part of it is going to be the larger “content tent” that we’re building and what we need to accomplish that.

So even to the extent that we have partners or user-generated content, there’s a curation role, obviously, that needs to happen. We’re going to make a very considered decision about what kind of staff resources we need to do what we aspire to do.

DB: The content tent sounds like a concept we used to hear about called the “hub” — you want to be the central point for news and information in the Twin Cities, but it doesn’t all have to be generated by yourself. You can be the biggest curator because you’re the biggest producer. Am I thinking of that correctly?

MK: I think that’s basically fair. The hub concept is, I think, passé. It’s not that we want to include everything, but the historical role that editors have played in newspapers or magazines or broadcast television news — it’s selecting and sifting through. Because if you put everything there, it’s overwhelming and it’s not well-organized and it’s going to be self-defeating.

DB: Plus, without customization for readers, it’s even worse.

MK: So what we want to do is be smart about what content we want to incorporate. And what’s useful for people and what’s important for people. It’s not the kitchen sink. That’s part of the issue that a lot of websites have had, trying to do everything.

DB: In a way, this is one complaint I hear about the Star Tribune’s website — that it’s everything coming at you.

MK: Without question, our website could use better customization and navigation. We haven’t really had the resources to work on that in the last couple of years.

Mobile and social networking
DB: Let’s take a step beyond that to mobile. This is an area where the Star Tribune hasn’t really done anything revolutionary. The Philadelphia papers just hired somebody (former Newsweek and Buzzwire executive Greg Osberg) who has long print experience but more recent mobile experience.

MK: It’s becoming quite the vogue to hire magazine people to run newspapers — I just thought I’d offer that. (Laughs.)

DB: So we’re talking about meters on the website — maybe the website is the print of tomorrow, something that’s receding into the past. Is mobile where everything’s going, is it going to eclipse the web?

MK: Oh, I think without question, a much higher percentage of our web-based — even browser-based — audience is going to be accruing from mobile devices, no question about it. I’m not the person to foretell what that percentage will be, but clearly, with the iPad and iPhones and all the other mobile devices, it’s going to be a greater percentage of the viewership so you’re going to have to make sure that your product is tailored and can be displayed efficiently in those devices.

DB: Do you have somebody in the shop that you would consider to be a mobile expert, or a mobile strategist?

MK: Our approach at the moment is to work with third-party technologists, as opposed to putting them on staff. We have emerging vendor relationships that will allow us to do this.

DB: Should we expect some sort of an iPad app or even an improved mobile app this year?

MK: Without question.

DB: What about social networking? This also predates you, but it’s an area the Strib has gotten into relatively late. They’ve embraced Twitter now, but lots of other people were on Twitter before; on Facebook, the numbers are not spectacular. Same sort of question: Do you feel like you have social-networking expertise in-shop, or acquire, or work with third parties?

MK: It’s probably similar. We certainly have people who are conversant with it. Do we have anybody whose full time job that is? No. Do we have anybody with an extensive career in that area? No. We’ll see what our needs are as we evolve but, again, most likely, we’d be employing third-party expertise in these areas.

The thing is, things change so fast in these areas, in a way, it’s better to rent the talent than hire the talent. So why not choose from a panoply of “Who’s the best expert today?” in the area that’s most important to you?

Personal history
DB: Let’s talk the personal stuff. You’re a New York mogul — well, not really a mogul, but a New York executive. You’ve been away 38 years. Why the Star Tribune? Why here?

MK: I had a wonderful career, I loved every minute of it, but it had run its course and I had done all the things that I could’ve hoped to do at Time Inc. So I left Time in January of ’08, and I thought I had one more really interesting assignment in me, but I wanted it to be just the right one, and this is an ideal circumstance for me because it’s in the broad realm I’ve been operating in throughout my career, which is publishing, and it was in a city that I’d loved and was excited about returning to.

It’s a great intellectual challenge and business challenge, but it’s also something that I enjoy tremendously. It’s an important job, I think, because for the good functioning of society we need good, strong journalism. And I can’t think of anything more rewarding than to be employed in the pursuit of the continuation of that for future generations.

DB: If this was a job interview, someone would ask, why did you leave your last job? So why did you leave your last two jobs, at Time and then with mergers-and-acquisitions advisers AdMedia Partners?

MK: I left Time Inc. because I was able to avail myself of an early retirement — so I’m actually a pensioner, even though I’m a young guy! We had an age-55 early retirement program at Time Inc., and I retired on my 55th birthday. I had the ability to leave. And as I said, I’d really accomplished what I could accomplish.

AdMedia Partners was a really interesting assignment, a complete change of course for me, doing essentially investment banking. I’d done a lot of M&A work in my last five years at Time Inc. I probably spent about as much time on that as I spent on anything else. But it was the worst 18 months in history to be working in investment banking (laughs), so it wasn’t quite as lucrative as I might have hoped.

But at my core, I’m really an operating executive, and I was really anxious to return to running something.

DB: Let’s talk a little bit about your family. You’re one of 10 kids.

MK: I’m the youngest.

DB: The only one I know about is your brother Dan, who is the former president of the local Service Employees International Union here. Which I find fascinating, given the unions you’ll have to negotiate with. Tell me a little about Mom, Dad and siblings.

MK: My mom was a homemaker, as they said in the ’50s and ’60s, and believe me, bringing up 10 kids, I have a lot of respect for what she did. My dad was an aeronautical engineer at Honeywell — the Stinson Boulevard plant — and worked in the space program era; he did a lot of work on those programs. Originally, my dad’s from northwest Iowa, from a farming family. My mom is from Worthington, Minnesota.

DB: And you grew up in Fridley?

MK: Until I was in second grade, I lived near Lake Minnetonka; in Orono, essentially. Then we moved to Fridley because my dad worked at the Stinson Boulevard plant and it was an endless drive along the old Highway 12. (Laughs.) And then I graduated from Fridley High School in 1971; the Tigers.

DB: Brothers, sisters?

MK: Far-flung, live all over the United States. Many of them are retired now, but for their careers, they were everything from farmers to sales executives to businesspeople to union presidents. There’s no way to generalize about my family.

DB: Where do you live now? Which city did you settle in?

MK: I live in [Minneapolis’] Lowry Hill. We bought a place there right before the holidays. Didn’t waste any time. A good time to buy; not such a good time to sell.

DB: And your wife — what does she do?

MK: Her name is Ruth Shields; she’s from Long Beach originally, and went to Pomona College and University of Pennsylvania Wharton School of Business. She was a McKinsey and Co. consultant and a corporate executive for a number of years; she worked for Time-Warner, among other places. She was in the wireless telecom business in the Aughts when it was imploding. (Laughs.) She retired to spend more time on family when our kids were in junior high.

DB: OK, I have to ask: What was it like to work with David Axelrod?

MK: David was an even better journalist than I was, but I’m afraid I don’t have any great stories. We spent a lot of late hours together putting the paper out. I was both sports editor and business manager, and David was one year behind me.