I woke up this weekend to the news The Times had finally sold off The Boston Globe to a local investor for a paltry $70M. And the buyer didn’t take The Globe’s hefty pension obligations. So the NYT essentially gave it away, just to be rid of it. I was there when they bought it for over a billion dollars 20 years ago. But now the business is a shadow of its former self, with circulation and revenue slashed in half, and bleeding cash. Ouch.

The news sparked memories of my three years at The Globe in the mid-’90s, in the last days of its glory as a mighty Boston institution. Even then, it was clear that an asteroid was coming.

In 1995, one of the less progressive-minded Globe executives told me they’d put the Boston.com logo on the truck fleet “when hell freezes over.” This finally happened around 2002.

I joined The Boston Globe in September 1993, fresh out of business school, as their guy in charge of getting the newspaper online – making the case for an aggressive digital investment and getting it done. I was the only one in the building with “online experience” (I’d helped Knight Ridder’s San Jose Mercury News do their first deal with AOL).  I stayed up nights researching and writing the business plan, coming to the conclusion that online media posed a serious threat to the newspaper business.

Because getting online was a hot topic for newspapers that year, I also got to sit in on Globe top management meetings and executive retreats, and even attended a couple of New York Times board meetings.

Boston Globe Interactive logo 1994

Walking into The Globe in ’93 was like a scene out of The Hudsucker Proxy – a huge organization in a gigantic building with floor after floor and department after department full of people keeping a well-oiled machine running. Circulation (home delivery and newstand). Retail advertising. Classified Advertising (jobs, real estate, automotive). Production (presses, composing room, etc). Marketing and Promotion. IT in the basement. A 400-person newsroom. And the executive suite.

Not to mention the trappings of power – the huge trophy swordfish that hung above the foyer (don’t ask), the hundreds of potted poinsettias distributed around the building for Christmas, the fine oriental carpets, the ornate boardroom.

The original 1994 Boston.com business plan is worth a look (PDF)  – it’s good for a laugh. We correctly sounded the alarm that the Globe’s business could be eviscerated by online classified ad competitors, and a horde of news, content and commerce brands in almost every vertical.

smoking gun page

We left the worst-case scenarios out of the business plan for fear of being laughed out of The New York Times boardroom. By worst case I mean where the business was completely destroyed in 5-10 years (in the scenario above, the business takes a big hit in five years, but is not completely gutted).

1994 plan potential ad revenue erosion

At the time, the strategic planners and analysts at the Times were deep skeptics that online competition would be meaningful even in 10-20 years. And in fairness, they had a point – it took Craigslist and the rest of the Internet 10-15 years, much longer than I thought, to totally eviscerate the newspaper business.

Interestingly, while the folks at The Times were skeptics in 1994, almost all the Globe’s managers saw the writing on the wall and wanted to move aggressively online – including those named here:

10-21-94 intro to Boston Globe Interactive business plan

The Taylor family, which had owned and run The Globe since 1872, lobbied the NYT’s Sulzberger family and got us a few million bucks to move fast in launching Boston.com (it helped that in 1994 the NYT newsroom under editor Joe Lelyveld wanted nothing to do with online whatsoever… so they let us be the pioneer for a while).

More important, Globe management gave us permission to be unconventional with our strategy – to launch Boston.com, rather than bostonglobe.com, and try to be a regional “portal,” which meant partnering with some of our competitors.

We ultimately hired a team of 35 and launched Boston.com’s beta version in August 1995 (the same week Amazon.com launched). If you feel like paying seven bucks for the Harvard Business School case study on the Boston.com launch, here’s that link.

We got kudos for this strategy right out of the gate, including a mention in one of Bill Gates’ famous internal company memos, lauding us as an innovator. And in the 17 years since its launch, Boston.com has done as well as (or better than) any other newspaper website.


So what happened? Why didn’t newspapers’ online efforts save them from the asteroid? (News flash: Jeff Bezos to buy The Washington Post for a token $250 million.) Because they were doomed by their own economics.

It wouldn’t really have mattered if Larry Page and Mark Zuckerberg and Steve Jobs and Bill Gates and Jeff Bezos had been running The Globe and other newspapers (well, maybe Bezos). Gravity was just working against them.

The essence of the newspaper business was buying paper cheap by the trainload, putting ink on it and marking it up 10x (to subscribers, which were 1/3rd of the revenue, and advertisers, which were 2/3rds).

To be more specific about the asteroid hit:

  • The huge fixed costs of the newspaper business (presses, trucks, newsroom) and variable costs (paper, fuel, truck drivers) eventually caught up with it, as one juicy revenue stream after another was cherry-picked by competitors with lower fixed and zero variable costs.
  • The leverage and power of national brands eventually overpowered regional brands like The Globe, once distribution was not an issue. This included both vertical brands (e.g. sports and jobs websites) and horizontal “portals” like Yahoo and Google.
  • The best talent wanted to work at Internet companies, not wait around at a slow-moving incumbent.
  • The Internet finally enabled TV and direct marketers to deal newspapers a knockout blow (both had been trying since the ’70s).
  • Newspapers tried to be good at too many different things (sports, real estate, intl news, local news), which kind of worked when they had a lock on distribution, but failed completely when that barrier collapsed.
  • The newspaper business was simply too good for too long. It was a gusher of profits, with 20% net margins for which you barely had to do anything but cash the checks. People worked hard, but 9-5 hard or 9-6 hard. It was the good life.

It doesn’t actually matter which of these is right – it was Darwin at work.

To further illustrate this point, below are the 1992 Annual Reports of Affiliated Publications, The Globe’s parent company (1992 revenue $414 million – its last year as a public company), and America Online (1992 revenue $26 million – its first year as a public company). Check them out (just click to download the PDFs) – the New York Times bought the wrong company! But in fairness, the asteroid looked pretty far away at that point.

Affiliated Publications (Boston Globe) Annual Report

1992 AOL Annual Report

My take-away from all this? Are there any lessons? Twenty years goes by fast, and when you see a lot of evidence that something is going to happen, it probably is going to happen.

The one thing I think about is the huge megaphone these newspapers had in their communities – they were the loudest voice, not just another Tweeter – and that how they used that megaphone mattered. The reason I worked long hours at The Globe was not for money but because I believed in journalism and newspapers and wanted to see them be players in the new media landscape – and that obviously didn’t pan out.

What we’re losing as institutions like The Globe fall into mostly financial hands is the values of the publishers who controlled them, and their ability to bring those values to the public dialogue. You hear this a lot from ex-news people, and it sounds like sentimental whining. But I got to know the Taylor family pretty well, and the Sulzbergers a little, and there’s something to it.

One enduring memory for me is a New York Times management retreat I attended where a sales guy got up and asked, “Why do we have to keep running articles about South Africa on the front page every day, why can’t we feature more of what people actually want to read?” To which Arthur Sulzberger Jr. stood up and said something like, “Because we’re not here to publish just what people want, we’re here to tell them what they need to know, so we’re going to keep running those South Africa stories on page one, thank you very much.”

As for The Globe’s Taylors, they were not only good businesspeople (they invested in cable TV in the ’80s and made a boatload), but they’d been stewards of The Globe for so long they were really on the hook in their own minds for doing the right thing, and almost all management discussions came back to that. I saw it firsthand. What’s the right thing to do for Boston? For the community? Our employees? For ensuring a fair-and-balanced and transparent-as-possible dialogue about major issues?

They may sometimes have been several steps behind the most progressive voices in Boston, but they were focused on a lot more than the bottom line. Yes, The Globe was a public company before the NYT acquisitions, but the Taylor family so thoroughly controlled it they could do anything they wanted.

That’s obviously not the case with most media companies today, with the exception of NYT Co., which as the last family-controlled holdout unfortunately still looks like it’s circling the drain. Let’s hope they pull it together.

(Note to current NYT management… if you want my strategy advice, call me, it’s not too late for you.)

Dave Margulius is CEO of Quizlet, and lives in San Francisco, CA. You can follow him on Twitter, or reach him via LinkedIn or as dmargulius on that Google mail service.


  1. Hey Dave. It’s Michelle Johnson. I have a copy of your business plan. I quote from it and show slides from it every semester in the first class in the Online Journalism course that I teach at Boston University.
    Why? Parts of this document are brilliant. I wouldn’t have understood that back in the day. It’s like looking into a crystal ball.
    And it’s so true that the Taylors embraced online and moved much more quickly than you would have thought possible for a mainstream news organization of that time. It’s remarkable. I recall that Steve Taylor had built a solid network that made it easier for us to automate production of boston.com. He was clearly thinking ahead.
    Anyway, you should know that your document lives on in journalism school. I can’t talk about the history of news online without quoting from this business plan.
    I would add one more bullet to your list of why things went wrong:
    *A new generation being weaned on digital moved away from print with unprecedented speed.
    I would have predicted that would happen, but not as fast as it did. As a college professor I see the impact of that shift every day. Even among some journalism students. Most get their news online.
    Enjoyed reading your analysis. I’ll add this to my course reading list.

  2. They thought getting rid of us paperboys and replacing us with adults in cars would save them, but I guess it wasn’t enough. Enjoyed reading your obituary of the Globe. I remember you telling me how it was like an ocean liner, that it took some effort to change course, but when it did, look out. But, like the liners, it’s been supplanted by something newer and faster that’s changed how people think and behave as Michelle pointed out above.

  3. Holy crap this is good. Should be required reading for anyone in media.

Leave a Reply

Your email address will not be published. Required fields are marked *