Business models

Church vs. State – Is it dead?

Separation of editorial and commercial - Church and State - has been the bedrock of media organisation. But as ad revenues go the way of the dodo bird, maybe it’s time to ditch the old model

The advertising model has dominated the last 70 years of media history.  It was hugely profitable but came with significant risk: the perception that editorial content would be influenced by ad dollars, franks or Deutschmarks. A solution was developed: content and revenue should be completely insulated in a very visible manner.

This led many newsrooms to adopt the so-called “Church and State” model. Following Thomas Jefferson’s idea of how government should neither promote a given creed nor limit religious freedom (in itself a rehash of the old “Render unto Caesar the things that are Caesar’s, and unto God the things that are God’s”), media built Chinese walls with journalists and editors – the saints – on one side, and the “tainted” commercial staff on the other.

The idea lives on today, with editorial often sitting on a different floor from commercial, product, distribution or engineering. But as ad revenues continue to dwindle and new monetization models pick up steam, the question arises: has “Church and State” outlived its usefulness?

A barrier to innovation

Working across teams is the best and the only way to give a voice to the customer, argues Denise Law, head of product at The Economist. The traditional division exists to ensure that advertising doesn’t tell editorial what they can and cannot write about. “Ten years ago, when advertising was over 60 percent of revenues, that made sense,” Law argued. “But now that subscriptions are the main driver, it makes sense for Church and State to work together to better serve the customer, particularly when it comes to innovation in distribution or product design.”

Subscriptions are fast replacing fading ad revenues at The Economist. Source: Annual report

Citing examples of successful cooperation, Law mentioned The Economist’s podcast production – which has tech and product working together with editorial – as well as media’s new app. The app was built driven primarily by user experience, unlike the website, which tends to reflect The Economist’s organizational structure. This is no longer true as we recently relaunched Economist.com on a new codebase using a more user-centred approach. Perhaps you can say: The new app was built using a user-centred approach and that is now being replicated for the redevelopment of Economist.com.

The new approach has been encouraged by a new layout, which has different teams working side by side in The Economist’s new office (the move from the iconic brutalist St. James building to Victoria Embankment took place in summer 2017). Today, the storied publication feels more like tech company – with post-its for agile sprints in common spaces – despite the leather-bound archives dating back to 1843 in the corridors. 

Similarly, breaking down barriers was a key driver behind the success of Dennik N, a leading Slovak publication. A digital native, launched by the team from SME after the latter was bought out by scandal-ridden investment group, Dennik N was essentially bootstrapped by the team all working together in the same room, working together to solve the problems faced by their nascent publication.

This arrangement lives on to this day, with most of the team based in a large single room on the outskirts of Bratislava. One of the key achievements was fine-tuning the subscription model, with journalists and tech working side by side to optimize everything from the precise position of the paywall cutoff to building a “reader CRM” system. 

This format proved extremely successful, with the profitable Dennik N recently hitting 40,000 subscribers and opening a Czech sister publication based in Prague.

Dennik N successful model of close cooperation across teams has delivered fast rising subscription numbers (hitting 40,000 in 2019). Source: Medium

Church versus state

While digital natives have the benefit of being able to build new solutions and ways of working from the start, some of the legacy publications struggle to adapt.

Managers on the commercial side often find it hard to work with veteran reporters used to getting their way in every argument, often using “Church and State” as a way to draw red lines in the organization. What makes the relations particularly tense is that these lines are often one-way – editorial can tell commercial to stay out of their business, not the other way around.

“Church meddles in State, telling them what they can and cannot do, using ‘Church and State’ as a way to prioritize editorial vanity projects,” said a senior leader in a major European media on condition of anonymity because of the potential fallout for commercial-editorial relations.

While this gives editorial a lot of decision power, the person added, it often also ends up blinding them, as other functions spend more time collecting information about audience behaviour and consumption habits. Journalists have a natural need to educate their readers – a core part of their mission – but often fall into the trap of “we know better than the customer”, thus harming the final product, the publication.

“Church meddles in State, telling them what they can and cannot do, using ‘Church and State’ as a way to prioritise editorial vanity projects”

Senior European media leader, speaking on condition of anonymity

Instead, editorial often ends up looking to competitors to decide what kind of products to launch – driven by a desire to match their rivals rather than respond to audience needs. This aimless arms race has frequently drained resources and left customers unsatisfied, littering the media market with barely distinguishable products.

Such a situation can poison relations within a publication, with each side blaming the other for their failings. As a result, different functions retreat into their bases, focusing on trying to solve their piece of the puzzle rather than tackling the tough questions together.

“We’re using ‘Church and State’ as an excuse,” the person deplored.

Silo syndrome

Aside from potentially fueling antagonistic relations, “Church and State” also raises a problem well known to any large organisation – the formation of insular “silos” that don’t talk to each other, and work towards separate goals. As a result, departments can end up working at cross purposes at the detriment of company-wide objectives.

To address this challenge, companies in other industries have reorganised internally so that work is delivered by cross-functional teams, where the product team works side by side with engineering, operations, marketing and others. First embraced by tech firms, such transformations are now taking place in all industries – a whopping 79% of senior executives named this as their top priority in a 2017 Deloitte survey.

“Church and State” creates silos by design, blocking the adoption of new solutions, and removing the chance of cross-pollination between teams. According to Bella, who has travelled across Europe helping media build paywall models to replicate Dennik N’s success, one of the main challenges is a lack of internal alignment.

 “A sales manager who sees a new product that could threaten their targets (and their bonus) – for example, a paywall that would lower traffic to pages with digital ads – might end up working against it,”

Tomas Bella, Digital Editor of Dennik N

Employees stuck in their silos and working towards individual KPIs can easily stall, or even actively sabotage, the launch of new models. This is particularly true in the case of paywalls, where clear commitment on behalf of the whole company is needed to overcome initial reader reticence to pay.

 “A sales manager who sees a new product that could threaten their targets (and their bonus) – for example, a paywall that would lower traffic to pages with digital ads – might end up working against it,” Bella argued. Instead, he has seen cases where sales managers would tell advertisers that the project was “just a test” that would soon be dropped, or journalists sending PDFs of articles to readers – undermining the whole effort.

The lack of alignment goes back to whom different departments see as customers. While commercial focuses on advertisers, journalists try to serve (and educate) readers. That conflict quickly evaporates as business models change. Subscriptions in particular create common goals across departments, raising the question: how can we do a better job in serving our subscribers?

Breaking down silos in organisations is a bigger task than just looking past “Church and State”. It will likely require building a shared purpose across the whole organisation and better understanding of readers. A good place to start, according to Law, is making sure “the voice of the customer is included in every conversation”.

Photo by Jehyun Sung on Unsplash

Finding new leaders

The existence of silos also creates a deeper problem: one that has led to the persistence of structural problems in many media companies. Most media are run either by powerful chief editors or CEOs – people who have grown up within a certain function.

Perversely, this makes striking the balance between the needs of the organization particularly difficult. Chief editors tend to see things and set priorities without considering the full resource implications, deplored the senior leader, afraid of relinquishing control. Meanwhile, CEOs coming from the commercial side often overlook the nuances of editorial work, with harmful effects on the quality of reporting, public image and pursuit of the media’s social mission.

Many companies in other industries have internal leadership programs where top talent is assigned to challenging projects in different parts of the organization. By rotating staff across functions, after a few years, such programs deliver a crop of senior leaders with a solid grasp of all aspects of the business.

These rotations are highly unusual (and frowned upon) in a Church and State model – in fact, having personnel move across lines goes against the very core of having a firewall in place to insulate the different departments. As a result, even media with such leadership programs (Axel Springer ran a relatively extensive one up to 2017, although it has since been downsized) tend to limit them to commercial and some product-related functions.

Not all hope is lost, as the rise of new revenue models has upended these customs. For example, commercial staff with a drive can find a creative outlet in native advertising, where pitches to potential clients need to combine editorial imagination with marketing savvy and technical prowess. This is the case for Platfor.ma, a media start-up based in Kyiv, where cross-functional teams work together to design creative native advertising projects, according to CEO Masha Fronoschuk, resulting in a more well-rounded set of employees.

Having teams that don’t see the big picture is not just an issue for commercial organizations, but even for non-profits, which don’t suffer from the classic conflict-of-interest problems. Correctiv is a German investigative organization of around 50 (including part-time staff), with teams working on events, radio, community-driven reporting and even theater plays, all working towards a goal of delivering greater reach and impact for their investigations.

According to publisher David Schraven, the biggest challenge is coordinating the different pieces in order to deliver a maximum impact. It typically takes about 5 to 6 months before new employees see how the pieces fit together – a challenge Schraven deals with using company-wide meetings and encouraging people to work on different projects.

“There needs to be a lot of movement,” Schraven says. “This is the only way to get people to understand.”

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