Television, news and music chief executives on shifting their business from analogue to digital
It was not the answer that had been anticipated to the question: “If you could only choose one, which would it be; analogue or digital?”
Gilad Tiefenbrun is the son of the founder of Linn Products, maker of the Sondek LP12 record player. Since its introduction more than 30 years ago, the LP12 has been the turntable by which all others are judged. Still in production today, the company says that “each component has been continuously improved to extract even more information from a vinyl record.”
So when Tiefenbrun answers “digital”, it is something of a disappointment. Despite audiophiles’ long-held assertion that a digital recording on a compact disc does not come close to the fullness of an analogue recording on vinyl, the managing director of Linn says simply that digital audio “contains more information”.
But Tiefenbrun knows more than most that his view comes with a signifi cant caveat: “It’s not a case of ‘vinyl good, digital bad’ or vice versa; it comes down to the care and attention that goes into the original production, the recording and the reproduction.”
Although the company, based just outside Glasgow, is famed worldwide for its turntable, it did for a time make a CD player (almost grudgingly introduced, 11 years after the advent of the CD in 1993) – but it halted production in 2009.
Understanding the technical reasons for this decision is not for the faint-hearted. It is not just to do with the difference between analogue and digital recordings but also the potential range in quality of recordings when using one of these media.
Adherents of analogue and vinyl say that more of the sound is captured; it is, literally, more wholesome. Digital recordings, by contrast, only sample bits of the sound. Matters are made worse, they point out, by digital audio file technology which, to make whole music libraries storable on a small device, compress the sound, depriving the listener of even more of the recording.
But Linn didn’t stop making CD players because it believed vinyl was inherently superior; it was because the digital recordings offered by the music industry were so poor. Its answer has been to make devices that can stream audio from the internet, of a quality that is unprecedented.
The firm has done deals with some of the major recording companies for access to music that has been produced in such a way as to capture as much of the sound as is possible. It then streams the music without any compression; the experience is, says Tiefenbrun, as close as possible to being in the studio with the musicians.
The journey that Tiefenbrun has been on, the apparent contradictions and the lessons it contained, is emblematic of that experienced by major media industries in the transition from analogue to digital; not just music, but television and newspapers.
For this feature, as well as Linn’s managing director, Connect also interviewed Rob Woodward and Ashley Highfi eld, chief executives of STV and Johnston Press respectively. The three head Scottish companies which are negotiating the rocky road between the two worlds.
Fascinating in themselves, their perspectives on the experience offer insights that apply more widely to other industries – and even to the public sector in the delivery of services to citizens. The most important is that yes, technology is transformative, but it is still the quality of the content that is defining.
In the boardroom of STV overlooking the Clyde, Rob Woodward recalls his adoption of technology, from using a Sinclair scientifi c calculator when sitting his Highers in Troon, to the punch cards that were fed into an IBM mainframe computer at Durham University and running a financial analysis programme written by General Electric in his first job. At Touche Ross, there was a Compaq ‘luggable’, the size of a suitcase, weighing 12 kilos, with a three-inch screen and running MSDOS. At home he had a Commodore 64 and in the early nineties, one of the fi rst handheld mobile phones from Motorola. At the end of that decade he “caught the Apple bug”.
Today, says Woodward, mobile technology is driving change in the way people work: “If you think back, the IT department was responsible for issuing a standard phone and they would tell you what you could and couldn’t do with it. Now, the power has shifted to the consumer and the IT department is an enabler rather than dictating the rules; it’s a fundamental change.”
There are still remnants of his analogue world, however. A keen landscape photographer, Woodward has a Mamiya film camera and a vinyl record collection. He doesn’t buy a daily newspaper, instead subscribing to the Financial Times’s digital edition, but he does prefer the print edition of his Sunday paper: “Something is lost from the online experience. When you look at the physical product, I still fi nd it easier to engage with and there is serendipity.”
At the beginning of 2007 he was appointed chief executive of SMG, the then owners of STV, Virgin Radio and assorted media businesses. Woodward recalls it as a “near death experience”. The company was floundering under what was described at the time as “a weak strategy, weakly executed – leading to excess debt, a lack of focus, instability in the leadership, dissatisfaction amongst the shareholders and poor staff morale”.
For years it had been on a spending spree, paying top dollar for high-profi le companies whose growth potential was badly misjudged. It had already been forced to sell its newspaper division, including The Herald, Sunday Herald and Evening Times. Traditional business models were crumbling as the internet captured the attention of advertisers and analogue pounds were replaced by digital pennies. Its chief executive had resigned the previous summer, followed in the New Year by its chairman and non-executive directors.
A new team was swiftly in place, but “we were going out of business,” says Woodward, “we were just a few months from administration.”
SMG managed to negotiate breathing space from the banks and, over the next three years, began a turnaround that included selling off billboard fi rm Primesight, iconic cinema advertiser Pearl & Dean and Virgin Radio (the latter for a quarter of its original £225m purchase price). The aim was to bring the company back to its core: television. But at the same time, it was operating in the middle of opposing forces; deep recession and the need to invest in digital.
Woodward relied on a series of business principles: articulate a vision, build strong teams, trust your instinct, instil confi dence, set ambitious goals, communicate relentlessly, be accessible (at STV, there are no offi ces and Woodward sits in the middle surrounded by its staff) and inspire others to over-achieve. And “one of the most diffi cult”; know when to acknowledge something’s not working.
Today, he says, “we have a company that is widely acknowledged as being at the forefront, particularly in digital media. It’s been an exciting and challenging journey but we have an organisation that is absolutely aligned and determined to continue commanding leading positions in the markets we serve.”
In February, the company announced its latest set of results – which included increases in profi ts, margins, digital revenues and earnings per share – and set itself new voluntary key performance indicators. “STV has an ambitious plan for growth and our strategy remains clear going forward, with investment in strategic partnerships, helping extend the STV brand in our core Scottish market and beyond,” Woodward told analysts.
“We remain committed to growing a strong, successful and dynamic STV, cementing our position as Scotland’s most popular peaktime TV station and leading commercial media website, and as the provider of unique digital content across multi-platforms.”
The turnaround has engendered a new vibrancy within STV and provided a boost to the media industry in Glasgow. A revamp of its schedule and output has been felt across the country; Woodward says that it has the most localised news service in the UK, with programmes in Glasgow, Edinburgh and Aberdeen and an optout bulletin for Dundee. It launched Scotland Tonight, which quickly overtook the BBC’s Newsnight Scotland in viewing fi gures, as part of its response to the constitutional debate in the run-up to the referendum. And its websites – including more than 20 recently launched ‘STV Local’ microsites – are now visited by three million people each month.
“Five years ago, we didn’t really have a digital business,” says Woodward. “Now we have a mantra – whenever, wherever; meaning our consumers are able to connect to and consume our content at any time across all mobile platforms and home entertainment devices.
“The thing that has surprised many is that television has proved to be a lot more durable then people thought. Five years ago, they were saying television will ‘disappear’ onto the internet; people would desert the terrestrial channels and only consume short-form content delivered by the likes of YouTube.
“Actually, that hasn’t happened. Last year, for the fi rst time in 20 years, our share of viewing increased. We have weathered the digital revolution and see it as an opportunity; in fact, I’d say that the world of the internet is coming to the world of the television, not the other way round.”
Looking forward, Woodward points out that media devices will continue to evolve – from HD to 3D, even 4D (adding physical sensation to the viewing experience), that a battle will be fought – between ‘smart’, web-enabled, TVs and ‘set-top’ boxes – over which provides access to content, and that delivery by broadcast and broadband will become seamless. Ultimately, all things that we use will be connected; the so-called ‘internet of everything’.
“We’re ‘platform agnostic’,” says Woodward, “we don’t mind; the important thing is that our content is available free of charge across as many platforms as possible. Social media and the use of ‘second screens’ by consumers will make interaction with our content increasingly creative.”
Creativity, content and connectivity – Woodward’s “three Cs” are at the company’s heart, he says. “Our schedule is distinctive, our consumers have got used to the combination of the best of the network and our local content, our digital services are developing rapidly, news and current affairs are going from strength to strength. I do believe we have put STV back at the forefront of serving Scotland. Ultimately, in an analogue or digital world, people are driven to invest their time if you provide content of suffi cient quality.”
In terms of the digital delivery of public services, Woodward has this advice: “Start with the consumer; think carefully about what is going to attract them to interact with a public service which is being provided in an innovative way. It can’t start with centralist thinking. Keep it simple and make it seamless. And digital has to be at the heart of the organisation; I see many innovations in the public sector that are conducted as experiments rather than forming the core of service delivery.”
At the other end of the M8, in Edinburgh, Ashley Highfi eld is attempting to breathe life into a newspaper company that was hit hard by the recession and has struggled to shift from print to digital. At the publication of the company’s annual results earlier this year, Highfield, who studied computing at City University Business School before joining Coopers and Lybrand as a management consultant, presented a 60-slide outline of his strategy to remake Johnston Press as a successful online business, with some print interests, by 2020.
Since taking over last November, Highfi eld has been extolling a mantra of “local, social, mobile”. By the beginning of the next decade, he believes that 75 per cent of the company’s output will be consumed digitally – mostly on mobile devices. Revenue will also be derived evenly from print and digital; today, the latter only accounts for 5 per cent of the group’s income.
It is a bold move, though some would say obvious; even that old newspaper romantic Rupert Murdoch believes that the physical product will gone in 20 years time. But Highfi eld approaches the future steeped in digital, not print. From Coopers and Lybrand, he joined Flextech (now Virgin Media) as managing director. Subsequently, he was director of new media and technology at the BBC, where he was responsible for the launch of the corporation’s iPlayer, and was editor-inchief of BBC Online.
A short-lived position as chief executive of Project Kangaroo, the joint venture between the BBC, ITV and Channel 4 to develop a one-stop destination for the broadcasters’ programmes, which was halted by the Competition Commission, was followed by his appointment as a vice-president of Microsoft, responsible for its UK consumer and online business.
Running a troubled regional newspaper group appeared an odd career move. In the run-up to the global financial crisis, Johnston had added to its debt-fuelled diet of titles with the purchase of Scotsman Publications from the Barclay Brothers for £160m. As share prices and revenues crashed, it was saddled with £500m of debt.
On landing the job last November, Highfi eld was asked why it had appealed: “What I did for eight years at the BBC was to really help transform an organisation into the digital age, without alienating the heartland audiences. And so the work I there in building BBC Online and, subsequently, launching iPlayer, is very much in line what I’ll be looking to do at Johnston Press.
”We aim to put digital at the heart of Johnston Press. Newspapers will remain our primary revenue stream for many years to come, but the web and apps, accessed from PCs, tablets and smartphones, are becoming as important, if not more so, as an access method for an increasing percentage of our audience.
“We have embarked on an ambitious plan to re-launch all our titles as far more integrated digital and print hybrid offerings, refreshed and revitalised in print, with new web, mobile and iPad offerings. In some cases, the internet will become the hourly and daily pulse of a community and we will move to printing the physical paper just once a week – with overall audience uplift and a considerable increase in profitability for those titles.
“In all communities that we serve we aim to have a web audience at least as big as our newspaper circulation and to use print to actively cross-promote the web and vice versa, thus remaining relevant in a digital age, while not alienating our heartland audience.”
Highfield echoed many of the observations made by his counterparts in music and television; content is king, but sometimes the old model endures: “I read a print Sunday newspaper; there is something about how much information you can scan in a physical paper, reading what you want but still being able to note items that you don’t.”
Like Woodward, Highfield owned a Commodore and learned to programme. He has a vinyl record collection too, but his turntable is connected to a digital system that allows him control of music around his home. For him, it’s not the technology in and of itself; it’s the impact it can have: “Media was the obvious place for me to go; it’s where analogue meets digital or where creativity meets science. It’s where there can be real impact on people’s lives.
“I never really wanted to work for a pure Silicon Valley start-up; I was always much more interested in how can you transform industries and people’s lives. So at the BBC, it was how do you challenge assumptions and change paradigms. In fact, the technology of the iPlayer was relatively trivial; it was changing the culture in the BBC and the industry.”
For the public sector, engaging citizens and delivering services is a “huge issue”, says Highfield, but he gave a specific example of the potential based on his experience at the BBC and with Microsoft’s MSN: “One thing that worked particularly well was where the Government shared data and consumer-facing companies produced some really innovative services. If there was one thing I would do it would be to encourage more public-private sector partnerships, more transparency of data that allows individuals and companies to create new services.”
For Gilad Tiefenbrun, the journey from analogue to digital has been liberating. He recalls being in New York some time ago and meeting executives from Universal, Warner, EMI and Atlantic: “The majors in the music industry with thousands of back catalogues – and I wanted to present to them our Linn Studio Masters concept.
“After a brief demo of an mp3 music file and a Studio Master hi-resolution file of the same song, most music execs in the room by then had realised that they have been commoditising music for the last 25 years; diminishing the intrinsic value of music and their company’s stock value along the way.”
Earlier this year, Tiefenbrun announced a partnership with Universal for its Studio Master concept: “The highest quality music file available anywhere. It allows the listener to hear a recording exactly the way the original artist and producer intended it to sound, before it was altered to fit on a CD or squashed down to mp3 size.”
It’s an exciting time for the company; Tiefenbrun was recently invited by Neil Young to his home to demonstrate the technology. But like Highfield and Woodward, he reiterates the fundamental issue of quality: “What matters is the level of care and attention to detail that human beings put into the production and reproduction of music.”
Tiefenbrun draws a parallel with newspapers: “Today, a lot of the news we consume is based on recommendation and referral; we are still looking for trusted sources. But in terms of newspapers, it’s still down to what goes into them; the source material.”
And of digital delivery of public services, he offers this: “There is problem if you go for this ‘vanilla’ approach of appealing to the widest group possible. The goal should be ‘mass customisation’; how do you design services that don’t simply offer a universal template that everyone must accord to but instead are individualised?”