AI can help quality journalism be an even stronger growth business

FT Group

AI can help quality journalism be an even stronger growth business

Financial Times CEO on why quality journalism is here to stay in the age of AI and the key role of the FT Sofia product and development team in the company’s growth strategy

FT Group

© FT Group


Biography:

John Ridding has been the Chief Executive Officer of the Financial Times Group since 2006. Ridding has a degree in Philosophy, Politics, and Economics at the University of Oxford. He has been with the FT for more than 30 years in both editorial and executive positions, including Hong Kong Bureau Chief, Paris, and Korea Correspondent; two years as Managing Editor and two years as Deputy Editor. Under his stewardship, the Financial Times has expanded its global operation and developed its digital channels, gaining a reputation for innovation, including pioneering the metered access model.
The Company:

The FT Group, part of the Japanese holding company Nikkei Inc., provides a range of business information, news, and services. It includes the Financial Times, the authoritative business news organization, FT Specialist, and a number of products and joint ventures, offering live events, thought leadership, or research services for niche audiences. The FT Group employs more than 2,900 people worldwide, including 700 journalists in 40 countries. The FT group has a global paying audience of 2.7 million, which includes people paying for FT's journalism, products, and services. In 2018, The FT Group launched its product and development center in Sofia, which is central to the FT growth strategy. It employs more than 220 people in various roles from software engineers, and data and business analysts, to product managers, user behavior researchers, and UX designers. They are responsible for key products and divisions within the FT such as FT Core, FT Professional, and FT Specialist.

What is the purpose of your visit to Sofia today?

The Sofia operation has become an important part of our global operation. A third of our global product and tech team is here in Sofia. Product and tech development is always important, but it's a particularly important phase with generative AI. We've got a lot of product ideas and Sofia is central to that.

I'm here with Mr. Hasebe, the CEO of Nikkei, to meet the team, say thank you, and understand what they are up to. Being here at the same time demonstrates the strength of our partnership with Nikkei.

How do you evaluate your investment in Sofia? How does it contribute to the overall strategy of FT?

When John Kundert, the Deputy CTO at the time, and Cait O'Riordan, the CTO, were doing a global assessment of where to set up a major product and tech center; they looked at a number of countries like India, and Portugal. They came into my office and said: "We think that Sofia is the best place, and explained their plan." This is quite a high-risk operation, but six or seven years on, their confidence and excitement about Sofia have been fully vindicated.

The first step was to bring the FT Core platform team, which works on the fundamental technology around our subscriptions model, and which is central to our business model. But over time, they've taken on more activities and areas. They now support FT Specialist, which is one of our key divisions. They're fully involved in our work with generative AI.

I hadn't realized the strength of the cultural tradition in Bulgaria around software engineering. But it was also quite good to come and realize that gender diversity is a big asset and strength of Sofia. Half of the team here are women.

The FT transformation in the past decade has been impressive. What is at the heart of the FT strategy today?

When we started charging for journalism online in 2006, it was quite radical because everybody thought content should be free.

I remember I was criticized a lot when I went to the US to explain our strategy and all the big tech players were saying: "No, that's wrong. Information on the internet should be free."

I said quality journalism requires a lot of investment and we need a revenue stream that is stable and strong. And, frankly, good journalism is valuable - people should be willing to pay for it.

Right from the beginning, the core principle has been the reader and reader revenues. And whatever disruption has happened throughout the last 10, or 15 years in that space - digital, mobile, AI, the constant principle is engagement with the reader.

We developed the art and the science of reader engagement, which digital technology allows you to do. You can understand how much time they're spending, what they're reading, what they're not reading, and the formats that appeal to them.

We've diversified text with audio, video, data visualization, and computational journalism.

There's been a radical change in the structure of the business. We went from 80% print revenues to 70% digital now. We went from 80% advertising revenues to about 70% content revenues.

When we launched the registration and subscription models, we got this incredibly valuable data, which allowed us to optimize the business. And obviously, AI will add a whole new level to that.

The Reader engagement will continue to be central whatever happens to the environment in which we're operating, which is continuing to change quite rapidly.

Is Generative AI search threatening the subscription business models of media?

Everyone in news media must be thinking about what are the risks and opportunities of generative AI. My perspective and FT's perspective is that the opportunities are greater than the risks.

I think the biggest risk is disintermediation, that people will go to AI for queries. They won't go to the publications. We need to be mindful but this risk is manageable.

The opportunities are significantly greater and fall into two or three different areas.

Firstly, AI gives us the ability to further optimize our subscription model. When you think about personalization and marketing analytics, the predictive power of AI will help us continue to be increasingly relevant to readers.

In areas like customer service AI can be very powerful in increasing efficiencies and those savings can be reinvested into quality journalism.

AI can help quality journalism be an even stronger quality growth business.

At a time of misinformation and disinformation, and given the state of the world, the value of quality, reliable, balanced, fair, authoritative journalism has never been greater.

One of the things we've been very clear on at the FT is the value and the appreciation of human journalism. When our editor, Roula Khalaf, made a statement last year saying that we are committed and will always do human journalism with trained reporters in the craft of journalism, that led to a very strong and positive response from our readers. We've spent 135 years building a brand and a reputation for great journalism and that's very powerful in this environment of disinformation and misinformation.

AI is very good at creative things, but it can't do trusted, breaking excellent news. It makes a lot of mistakes.

I think what will happen through this phase of generative AI is that the incentive is for publishers to focus ever more on reliable, quality, exclusive information. It can be quite a healthy development, focusing news organizations on what they should do, which is independent, original, quality reporting.

In terms of commodity news, maybe AI will be quite effective. But I don't see how they're going to replace Martin Wolf, one of our great colleagues, or our investigative journalism team.

The other opportunity area is in products and services. We are launching our own query machine "Ask the FT". For a user, the ability to interrogate our newsfeed and archive and get a structured response is incredibly powerful.

We're about to launch in-car audio using AI. So you'll have a complete FT audio experience in your car.

We've got the new digital edition, which immediately translates into 35 languages using Google translation, which is getting better all the time.

Computational journalism is a whole new area of journalism, where we can use AI as a very powerful research tool to sift through lots of data and documents. When you combine the research power of AI with the journalistic craft and experience of our team, I think there's quite significant potential.

I don't downplay the risks. We've got to be very careful and thoughtful of how we engage with AI. The FT has always been on the front foot of technological change. There's no point trying to hold it back or ignore it. It's there. It's going to change the world. The question is - how do we leverage it most thoughtfully to our advantage?

Tell us about the strategic partnership you recently announced with Open AI. What's the reasoning behind it?

A lot of the deal is confidential, but what I can say is that we want to understand as deeply as possible the potential and pitfalls of AI and its interface with quality media.

Some key elements of this partnership are transparency around the usage of data so that we understand how readers are using AI queries and how FT journalism fits into that.

Source: FT Group

What would be your advice to smaller local or regional media companies with no negotiating power with the big tech giants? How should they strategize around working with AI companies?

The first phase of AI partnerships would probably be the big global publications. But what's going to be key to the development of reliable, useful AI is grounding it with reliable content. Whichever publication has the most reliable content in a particular sphere. In your case Bulgarian business has a fairly unique asset.

In the first phase of training for AI, they were just hoovering up all of the words in the world to get structure. In the second, grounding phase you have to validate queries against reliable sources like us or like you. In this area, there's a very effective potential partnership where you can see an alignment between tech, publishers, and readers. Tech companies need reliable information. Reliable information providers can extract revenue from that. The reader benefits because they want information that makes sense and is accurate.

In terms of tactics and strategy, our view is nobody gets to use our content unless they pay for it. It should be up to the publishers to set the terms and payment for a license fee. The government and regulators have a role in protecting intellectual property.

For all publishers, this puts a focus on supporting quality and original reporting. Even if the platforms have been scraping the web, they don't have the new words. News is what matters. As long as publishers refocus on the news and differentiate, they've got some pretty strong cards to play in this game.

There's also a huge variety of LLMs, which need different sets of data to train. How should publishers decide who to work with?

Our approach is to have a very consistent set of principles: a direct relationship with the reader, full visibility over the usage of the data, transparency, and appropriate payment for access to our content.

We approach all of the proposals through that framework, central to which is the protection of our brand, our journalism, and our IP.

But we're in an experimentation phase. We're trying to see how the different models behave.

AI platforms have probably already scraped most of the content in the world that's available. So in a few years, they're going to run out. It's also becoming clear that the volume of information on the internet will increasingly and disproportionately be generated by AI.

There was a good research project at the Computer Science Institute at Oxford University. They did experiments where they trained AI on AI output and after about three or four generations it produced gibberish.

I hope that market forces will push AI players to seek reliable information if they want to have useful models.

A decade ago there was this mantra that media companies have to become tech companies. How do you feel about this today?

Quality journalism and the craft of journalism are the core assets. Our newsroom is bigger and better than it's ever been. We now have more than 600 full-time journalists. We've got bureaus all over the world.

A lot of news organizations cut journalists because of business or revenue pressures. Our view is that leads to a doom loop. If you don't have a strong newsroom you've got nothing.

But equally, at the same time, the readers want to receive that journalism in formats that they find engaging and dynamic. The channels of distribution have become extremely important. We've seen tremendous growth in audio and video.

Data visualization and computational journalism are powerful new forms of journalism.

Technology is central to the business model. The subscription and engagement model requires very sophisticated marketing, churn management, acquisition, and engagement. Both sides have to be strong and both have to operate very well together.

Technology and data require investments and scale. Will this lead to even greater concentration in the media sector? Is that good at the end of the day for pluralism and journalism?

That's a valid concern. The cost of quality journalism and the first wave of engagement with AI is naturally the bigger global publications. If I were a smaller publication, I would be a little bit anxious. What we all need is a healthy ecosystem.

One of the big tragedies of the past 15 years has been the decline of local and regional journalism in many countries. They have an important social role in holding local authority to account and they're also a training ground for national and international publications.

I believe that the whole ecosystem needs to function. As long as a publication is distinctive and differentiated, it has valuable information for a particular audience or community. And that should be validated and have a place in the emerging ecosystem. The challenge is the speed and the cost of development.

It would be unfortunate to see further damage to the ecosystem. I don't believe in subsidies for news, but governments and regulators have a responsibility in terms of making sure that there's strong protection of intellectual property and that there is an opportunity for all publishers to be sustainable.

What will be the place of advertising in monetizing user data?

Оriginal first-party data is a gold dust in the advertising world now and because of our subscription model and engagement, we have very rich and deep first-party data. For advertisers that's incredibly valuable for efficient campaigns. If they want to target business travelers flying from New York to Dubai, we can give them a pretty precise read, being very respectful of privacy. We know where readers are, what they're doing, and what their habits are so you can be quite targeted which is extremely important for a return on investment for advertisers.

Advertisers are increasingly mindful that they don't want their advertisements popping up next to fake news or biased information. With FT you have a very trusted environment and control and I think that's one of the reasons why our advertising has been extremely resilient.

Advertising is in structural decline but frankly, we've been pretty resilient in terms of advertising, digital and print. I think print is a really good example because it's an environment that a lot of brands trust not to be manipulated. That's one of the reasons why our print advertising has stayed strong plus the fact that our print circulation has stayed incredibly resilient.

Social media and the rise of influencers blurred the lines between journalism and activism. Do you think the definition of quality journalism has changed?

I think every part of the information ecosystem that exists has clearly some value to people in different ways.

But the principles of quality journalism haven't changed. The ability to do quality journalism in new dynamic formats that we've talked about makes it even more engaging. But the core principles of reliable, balanced, fair, authoritative, relevant, and interesting information have stayed the same throughout 135 years of the FT's history.

What we call quality journalism is deeply researched, thoughtful, and checked through a serious editing process around an agenda that we think is relevant to our audience.

We use social media to project some of our journalism because we want to reach as many people as possible and diversify our readership. We want younger readers, but we'll only do so if there are ways of making sure that our journalism remains our journalism when it's on these platforms and channels.

How do you view or approach the trend of news avoidance, especially among young audiences?

I think it's a huge and worrying issue. Disproportionately obviously younger cohorts engage with social media more, but disinformation and misinformation are a universal problem and challenge, particularly in a year where more than half of the planet is voting.

There is a particular issue with younger readers, and I think it's very important for news organizations and for government and regulators to understand the importance of reliable information to that demographic.

One of the priorities we identified for the coming years was to develop our younger readership. Six years ago we launched our schools programme, which makes the FT free for any secondary school and up that wants our journalism. We're now at about 5,000 schools in 120 countries, including North Korea.

We curate the FT so that it's not too challenging or daunting for younger audiences. We found that video and audio is a very effective way of reaching younger readers, being available at the time in the way and in the format that they want to engage.

I do not buy the argument that young people aren't interested in truth and facts. I think they are. I don't necessarily think the media has done a good enough job of putting the truth and the facts in a way that's relevant and engaging in front of that cohort.

There's work to be done and we're working hard on that. Because if you have a generation that is out of the habit of news, but also doesn't trust news, that's very scary.

The Reuters News Institute survey for digital news media last year showed fewer than a quarter of respondents trusted most of the media most of the time.

There's a very big responsibility on quality publications like the FT to uphold that trust and to take that trusted reporting to as many people as possible, hence our global growth strategy. An interesting fact that I came across two weeks ago is that the FT has readers and subscribers in every single one of the 248 countries and territories as defined by the United Nations. That is my happy fact.

The interview was taken by Galya Prokopieva and Zornitsa Stoilova

Updated on 06.08. 2024: a previous version of this article incorrectly stated the name of the CTO of Financial Times back in 2018. Her name is Cait O'Riordan, not Kate Ridden.

Biography:

John Ridding has been the Chief Executive Officer of the Financial Times Group since 2006. Ridding has a degree in Philosophy, Politics, and Economics at the University of Oxford. He has been with the FT for more than 30 years in both editorial and executive positions, including Hong Kong Bureau Chief, Paris, and Korea Correspondent; two years as Managing Editor and two years as Deputy Editor. Under his stewardship, the Financial Times has expanded its global operation and developed its digital channels, gaining a reputation for innovation, including pioneering the metered access model.
The Company:

The FT Group, part of the Japanese holding company Nikkei Inc., provides a range of business information, news, and services. It includes the Financial Times, the authoritative business news organization, FT Specialist, and a number of products and joint ventures, offering live events, thought leadership, or research services for niche audiences. The FT Group employs more than 2,900 people worldwide, including 700 journalists in 40 countries. The FT group has a global paying audience of 2.7 million, which includes people paying for FT's journalism, products, and services. In 2018, The FT Group launched its product and development center in Sofia, which is central to the FT growth strategy. It employs more than 220 people in various roles from software engineers, and data and business analysts, to product managers, user behavior researchers, and UX designers. They are responsible for key products and divisions within the FT such as FT Core, FT Professional, and FT Specialist.
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