Running the SCMP

Gary Liu: Running the South China Morning Post
April 26, 2018, New York City
National Committee on U.S.-China Relations

Speaker: Gary Liu, CEO, South China Morning Post
Moderator: Stephen Orlins, President, National Committee on U.S.-China Relations

Stephen: All right. Good afternoon, everybody. This is — it’s great to have everybody on short notice. Obviously, the stardom has crowded this room.
Gary: Or the curiosity and incompetence or potential incompetent has crowded the room.
Stephen: But we’re now going to make these meetings available to many others so we’re actually filming this. So if you speak up, because this is going to be more in the form of Q&A, please speak loudly. Gary and I are microphoned but you aren’t so please speak up. But it’s wonderful to have Gary here. I think probably everybody here is at some point in their lives lived in a place where they’ve read the SCMP every day. I used to get it delivered to my door and still do when I’m visiting. But, Gary, now it’s been about a year and a half?
Gary: That’s about right. Just a little under.
Stephen: A year and a half ago, took over the SCMP, having had a great career in kind of — what would you call it? In startups, working in kind of startups in news aggregation. Is that the right term?
Gary: That was the last thing I did before I moved to Hong Kong.
Stephen: But it was the marriage of kind of Alibaba wanting to transform this great old brand, the South China Morning Post, into a digital platform to become a worldwide organization and Gary has spearheaded that. And I have to say that, in the last 18 months, I’ve read more SCMP than I have read since I lived in Hong Kong.
Gary: Wow!
Stephen: So it’s really —
Gary: That’s encouraging.
Stephen: Well, it’s good you took down the paywall. We actually had a subscription, anyhow, so I can’t say that.
Gary: You could still pay us, if you want. We’d be happy to take that.
Stephen: We read your advertising. We click through the advertising so you get the revenue. But it’s terrific to have you. This is going to be more in the form of a Q&A so if you would just kick it off and tell us kind of why you went from this great life in the United States back to Hong Kong to work on this transformation and kind of what your vision is for SCMP, and then I’ll ask you some questions.
Gary: Great. Thank you. It’s great to be here and so it’s great to spend some time with the National Committee when we are in New York. So let me tell you a little bit about myself for context and then we can talk about what the South China Morning Post is doing these days, what our mission is, and what we hope to accomplish over the next few years hopefully, in as simple terms as possible. So for me, the first thing I have to admit is that I’m not returning back to Hong Kong so I’m very — Hong Kong as a new place for me. I was born in Southern California, in Anaheim, which I get to go visit actually next week, which will be a lot of fun. And I spent my childhood split between a couple of different places. My parents are born and raised in Taiwan. So I spent a couple of years there and then I spent 10 years growing up in Auckland, New Zealand, another British education system, and which is the only reason why I know where salad fork is supposed to sit when I’m at dinner. And then I moved back to the United States for high school. And since the age of 14 until I moved to Hong Kong, so nearly 20 years, I’ve been mostly on the Northeast, in this area of the world. I consider New York City my home, although I’ll have to admit that high school was in New Jersey. So you have to excuse me for that. But we love New York City. My wife also grew up in New Jersey from when she was one and considers New York home, as well.
Like Steve said, I grew up in my career in the tech industry. So I went through the succession of Google, AOL, Spotify. And then right before I left for Hong Kong, I was the CEO of a news aggregation platform here based in New York City, a small start-up called Digg.com. That was once very very impressive and very important. Went through a second life, and we were in the process of turning that business around, as well, which I thought we did a pretty good job of it. But then I got a very unique call, a very unique opportunity to move to Asia, to go to Hong Kong and learn about a new city, and take over the news organization that was in transformation. And at the end of the day, as I was explaining to Steve earlier, there are really two reasons, one practical and one personal. The practical reason is that in the world of news, there are very few opportunities like this. In fact in a generation, there are probably going to be very few opportunities like this. A news brand, with us as dense of a history, as important of a history as the South China Morning Post with the opportunity and the resources and the intent of crossing a technology chasm to become globally relevant. At a time where the story of China is of increasing importance, that opportunity is hard to say no to. And secondly, more personally for me having grown up in largely the Western world, with an ethnically Chinese background, and having been part of that culture and understood it well and speaking the language, I’ve always felt like if there was a there was a gap in understanding. And that gap, unfortunately for me, I saw was growing and not decreasing. And having an opportunity, personally, to participate and hopefully helping bridge that gap and elevate the level of thought and understanding and discussion between the East and the West, for me, was very personal. The idea that my future kids are almost certainly going to be global citizens could possibly grow up in a world of greater mutual understanding, of greater mutual cooperation that I didn’t necessarily get to see, although I do know that even my generation had it much better than in the past, was something that meant a lot to me.
So for those two reasons, my wife and I picked up our roots here in New York and moved to Hong Kong about a year and a half ago. And it was my wife who made the much larger sacrifice. Her family is still here in New Jersey. She’s a Pediatric Dentist so she had a practice in the Lower East Side that she had to sell, and now is no longer practicing because Hong Kong makes it difficult for foreign medical professionals to practice. She is still hoping, fingers crossed, knock on wood, that she’ll pass all the licensing exams. So she really is a participant in all this, an important participant where she believes also in the mission of what we are trying to accomplish at the SCMP and has decided to come along and be a great partner in this adventure.
Now, to the SCMP, to the post. What on earth are we doing?
Stephen: Tell me who called.
Gary: That’s a very unexciting story. It was an executive headhunter.
Stephen: Oh, it was a headhunter?
Gary: Yeah.
Stephen: It wasn’t Joe Tsai or Jack Ma?
Gary: No, my goodness. That would have really shocked me. I’m not sure I would have believed it was either that I probably would have hung up the phone. No. It was an executive recruitment firm that understands the media space quite well. Clearly, not well enough to realize that they shouldn’t have recommended me but they did and I went through a series of conversations with the incumbent CEO who was leading the search for his replacement. And I got to meet the team who are absolutely exceptional. The team and the leadership team we have, both on the editorial and the business side in Hong Kong, is world-class. And after meeting that team, it became apparent that we would actually be able to accomplish these grand goals that the organization had. Should I get to the grand goals?
Stephen: Go ahead.
Gary: Okay. The mission of the South China Morning Post is dead simple. It is to lead the global conversation about China. It’s dead simple to say and repeat, extremely difficult to actually execute on. And we are a news organization that is struggling with the same things that every other news organization in the world is struggling with right now. The discovery mechanisms for content, especially news content, the user behavior around news content, all of that has shifted so dramatically in the last 20 years and unfortunately, for our industry, we didn’t pay attention for the first 15 of those 20 years, and we let other people disintermediate our entire stack. We used to be able to collect news how we thought was right, to be able to package it in the way that we wanted to, and distribute it the way we wanted to, and everybody’s experience was controlled by us as a newspaper from start to finish. Every single level of that experience and that relationship with customers is now fragmented and platforms primarily owned all of it. And increasingly so, we see platforms don’t feel like if they have an accountability towards media literacy, which is why media literacy around the world is degrading.
And so in that environment, a news organization trying to turn around our business to go from being print centric to digital first which, by the way, it’s just a means to an end. And that end is to become a global median organization not just the paper of record for Hong Kong, although that remains a primary importance for us. But the paper of record for Hong Kong as well as the global source on China, that shift, that parallel shift of both technology and channel as well as expertise and audience is what we are trying to attempt right now. And it comes with all of the technology difficulties, the internal operational cultural structural difficulties, the distribution difficulties, the audience development difficulties, all of those things. So it’s certainly a challenge. We’re not saying that we’re definitely going to succeed but I sure believe that we have a very good chance and we certainly have the right people to execute on that.
So as the organization, now over 80% of our audience is outside of our home market of Hong Kong, so we’re well on our way to being truly a global media company. And I’m talking about digital. Of course, digital is, I mean, it is just not even in the same ballpark as print readership at this point, so like 98% of our overall audience is digital. And our single largest marketplace is right here in the United States, and is also the fastest growing market place for us is the US. As the appetite for understanding China better continues to grow, you can imagine that our importance of the audience here in the United States is growing and we also have a primary focus on making sure that we create the right editorial and technology products to serve this marketplace and this market place to us being a proxy of the international marketplace outside of Hong Kong. So that is, I think, in relatively simple terms, hopefully, the mission and the goals of the SCMP and hopefully the next few years will have real stories of success to come share with all of you.
Stephen: What’s your strategy in terms of getting news into China?
Gary: Well, we have none because we do not exist in that marketplace. We are, and I assume you mean —
Stephen: Yes.
Gary: Obviously, not Hong Kong but in mainland China. So we are, 100%, a news website. All of them are a hundred percent blocked in China and we really don’t have any printed paper distribution in China either. And so, yes.
Jen: Excuse me. Has it always been blocked?
Gary: It’s been blocked for quite a number of years.
Stephen: Approximately when was it blocked?
Gary: Ooh. That’s a really good question. It certainly was before my time. I don’t know exactly.
Jen: Since they started blocking the New York Times, probably.
Stephen: Which has been bad since 2011.
Jen: Some of the articles were blocked before then but the consistent blocking —
Gary: Yes. So we have, from a company strategy point of view, we are not focused at all on that market place. There are plenty of people telling the story of the world to the Chinese market. That’s not our value to the world. Our unique value proposition to the world is that we get to carry what’s going on in China and in the region of Asia to the rest of the world. So we will focus on that.
Stephen: So no Chinese language edition.
Gary: No Chinese language edition.
Stephen: And no plan for a Chinese language edition.
Gary: No plan.
Female Participant: May I ask a question related to that?
Jen: Would you introduce yourself?
Stephen: And speak loudly.
Female Participant: I’m [inaudible – 00:12:48] and I have a background a little like yours, American, spent time in Hong Kong, back here in New York.
Jen: Best interpreter in the world.
Gary: Wow!
Stephen: She has interpreted for Deng Xiaoping, during [inaudible – 00:13:02].
Gary: So the difference between you and I is that no one will call me the best at anything ever, so that’s great.
Female Participant: My question is: If you want to be the world leader in guiding conversation about China, how do you position yourself vis-a-vis voice of China and how does Chine see what you’re doing vis-a-vis voice of China?
Gary: Let’s be clear, we don’t represent China.
Female Participant: I understand. But you also want to guide the conversation about China.
Gary: Guiding, well, we want to lead it. As in we want to initiate the right kinds of conversation and provide a platform for that discourse to happen between people. So we don’t assume and nor do we claim that we know it all or that we are the accurate perspective or that we are the exact and precise way to view China. We believe in the plurality of views. Our newspaper, our news websites, our overall conversational platform that we have built and are continuing to build on all represent that ethos, that belief of a plurality of views. And so our goal is to initiate it because we believe that we have an accountability and an opportunity to say: “This conversation and this increased understanding is important. Let us lead you into it.” And then have the conversation, then let you, let the participants have that conversation. So that is sort of the combined responsibility of both a news organization that leads, as well as a technology and product platform that allows for participation. And that’s what we will become. So I don’t know voice of China well besides from our own reporting of understanding what China is trying to do with all of their different media units and divisions and departments. But I think that our role and certainly the way that we see objectivity, the story of China is vastly different.
Stephen: What does it mean to have Alibaba as your owner? A company that has enormous business interests in China, who is one could imagine a situation in which reporting by, and they are a tiny tiny tiny portion of Alibaba. I mean, de-minimis would be an argument but you would have —
Gary: Well, thank you for that confidence.
[laughter]
Stephen: Look at their market cap and the value of SCMP. I mean, it’s just the state. Hopefully, one day you’ll be a huge part of Alibaba, but I don’t think they believe that. But you have the potential to upset the output card. How does that affect your reporting?
Gary: It doesn’t and it won’t. It will not. That was weird. It will not. Alibaba, at the point of acquisition two years ago, made it very very clear that they not only believe in but are going to sacrosanctly protect editorial independence. And you can — everyone in this room has a right to believe or not believe their words, but I can tell you, pay attention to their actions. And I can tell you, certainly in my year-and-a-half in the role of CEO and watching their actions on a daily basis, they have backed it up. They have not come into the newsroom. They have not dictated editorial line. They have not only left us alone, but protected editorial independence and continue to do so.  What it means to be owned by Alibaba is that we are one of the few news organizations in the world that has the resources and the patience to cross this chasm that all others are dealing with right now. The economics of our industry are completely broken. They are broken because high quality journalism is expensive to create but no one is willing to pay for it anymore. And by the way, yes, there has been a “Trump bump” in subscriptions, especially, in the United States and The New York Times and The Washington Post are touting these numbers of: “Yes, we’re seeing growth in digital subscription and we’re going to do fine.” Listen, it was a bump from 2016, but between 2016 and 2015 that was the difference. And 2017, what the news industry did was maintain that bump but it already plateaued after one year. And so the reality is that our industry is still in distress. We are still trying to figure out how to actually bridge that gap between how much it costs and how much people are willing to pay for it and we’re fortunate that we’re able to invest in people, invest in the right kind of journalism, invest in the technology, and invest in long term thinking in a way that many news organizations cannot. That’s what it means.
Nick: What qualifies you to lead the discussion from China?
Gary: It’s a very good question.
Jen: Can you introduce who you are?
Nick: Nick Platt
Jen: Former ambassador.
Nick: Ancient China watcher.
[laughter]
Gary: Here’s what we believe. We believe that we are in a very unique position, that we are not only English language news organization with 115 years or nearly 115 years of experience reporting on Hong Kong and China, but we are still based and we will always be based in Hong Kong, protected by the Independent Judiciary, protected by the freedoms of press that are existing in Hong Kong. And we have all global newspapers. And I’m carving out wires for a second here because, of course, they serve a different purpose. Of global newspapers, we believe we have the largest presence inside the mainland China when it comes to reporting resources. We’re not saying we’re going to cover it all. This is by the way, that mission statement, is as you can believe, as you can imagine is aspirational. But we believe that we have a unique position where on a daily basis, we write around 100 articles about Hong Kong and China, whereas, other leading global news organizations on a good day may write four or five. So the comprehensiveness of our coverage and the objectivity of our coverage is what we believe allows us to say we can lead and initiate that conversation.
Stephen: What do you say about the — I think there’s a lot of discussion in the United States about a diminution of press freedom in Hong Kong, that there’s increasing self-censorship in newsrooms and on editorial boards. How do you respond to that?
Gary: I am the wrong person to represent the Hong Kong media space, not only because I’m very new to Hong Kong, I have no history there, I certainly have no history in the media industry there besides my year and a half in this position. And secondly, I think the South China Morning Post is in a very unique position because we are an English-language newspaper that is pointed outward. And we’re not accessible in China. And so we are not the same as the Chinese newspapers in Hong Kong. And by the way, I’m not suggesting that there are limits on press freedoms with the Chinese newspapers. I’m just saying that we’re not part of that space, we don’t pretend to represent it, and I’m the wrong person to ask.
But here’s what I would say as an observer, as a news consumer. New York is home. We have 8 million people here and we believe that this is a vibrant – that it still the center of the media world. Well, us New Yorkers believe we’re the center of everything but this is the center of the media world. With 8 million people in this town, we have three newspapers that really matter. We have The Times, we have The Journal, we have the New York Post. In Hong Kong, seven and a half — I know people will disagree. That’s a personal opinion. In Hong Kong, seven and a half million people. You want to pay attention to the media space in Hong Kong? You’re reading 20 different news sources, at least 12 different daily newspapers. So I think the vibrancy of the Hong Kong media landscape just by that metric and just watching these debates and arguments that are constantly happening between the news organizations and the Hong Kong government about every which way, like every issue, that to me I see vibrancy. I see life. I see a fight for press freedom. And I’ll tell you, this South China Morning Post will always be on that side of the argument, that we will stand up and protect press freedom with everything we have, with all the backbone that we’ve built in the city of Hong Kong because it is incredibly important for our civic society.
Jen: Jen Barris, with the National Committee. Just following through on Steve’s question because there’s part of that that you can answer. So there may be all this vibrancy and perhaps freedom. But what about the issue of self-censorship? Because even in a vibrant, hopefully free place, people are thinking about what might happen if I break this. Do you have discussions about this within internally?
Gary: Our senior editorial leadership is very precise in the way they operate. And one of the key concerns is that there could be self-censorship in the organization so they’re constantly monitoring, making sure that we have the systems and the structure and the discipline set up so that doesn’t exist. One of the ways that we are trying to ensure this is that we have, by design, I would believe to be one of the most if not the most international senior editorial leadership teams in the world. So our top seven editors, including our masthead leadership are from seven different nationalities. And I would actually challenge anyone in the room to find a news organization with that kind of diversity. And that keeps us accountable. We have also created incredible transparency in our news organization.
I think a lot of you may have heard about the brand new headquarters that we just moved into which was designed for the sake of expressing our values, one of which key values is transparency. At the very newsroom, there’s a 2- floor atrium. In the center of that atrium is an oval desk which is occupied by all of our senior editors, so about 20 or 18. Actually, I don’t know it was. I think between 15 or 18 of them sit together in this oval desk and if you come into our office, that’s one of the first things that you see. You’ll be able to watch them operate at any time. Our entire newsroom walks past them to go anywhere. To go to the bathroom, you can’t help but walk past masthead leadership. And every single day, the news agenda is set right there out in the open. It’s not a closed door situation. The news meeting happens in an open room where any one, visitor or staff, is able to walk in. And at any point in time, our news organization knows that they can and are encouraged to challenge senior editorial leadership if they believe that there are any issues with self-censorship or non-objectivity in our news coverage. So we pay close attention to this. And I believe that we have the right leadership, and we have the right systems, and the right structure, and the right cadence to remain an objective news organization in reporting on China. You know, this is not passing the buck but at some point, Steve, I want to make sure that we send our Executive Editor Chow Chung Yan or Editor-in-Chief Tammy Tam to come here and do another one of these, and you guys can grill them on it because you’ll probably believe them a little bit more than you’ll believe me.
Stephen: We believe you, very compelled.
Gary: And they’ll probably be able to give you more details about how they operate and lead the newsroom.
Stephen: Who’s your competition and what may stop you from realizing your vision?
Gary: Our competition, that’s actually hard to answer. Maybe it is the lack of education about Asia and the American education system. Maybe it’s that. I don’t know. But I do think that —
Stephen: That’s not your competition that’ll stop you from realizing your goal.
Gary: Yeah. I think that that is part of the problem that we’re trying to reverse is that I went through the formative part of my education here in the United States and I know that I was way under educated on the importance of Asia and Asia’s role in global history, and certainly that of China. So I think that our competition right now is that there is difficult access. I know I’m not giving you the answer you want. I know that you want me to say The New York Times. But that’s not the case, right? The case is that to understand China, you need to read China Daily, The New York Times, and the South China Morning Post along with many others. You need to have all of those perspectives to get all the nuance and all the texture. All of us together right now, with all of our resources and all of our focus, can’t cover this country properly. And we can’t cover the rise and the impact that it has on the world properly. We’re getting better at it because, actually, there’s much more reportage and reporting about the country increasingly so. And so our uphill battle, of course, was with the changing dynamics of information distribution and misinformation. But part of it is our uphill battle is in marketplace. It doesn’t yet know how important it is to understand China, that China’s policies impact our day-to-day lives here in the United States, impact prices of the consumer goods that we buy, impact the futures of our careers, impact the way that our government relates to other governments that are not China. All of these things, I think, we have to fight against this inertia of thinking that it doesn’t matter.
Stephen: How often do you go to China?
Gary: In 18 months, I have been into mainland China twice. So not a lot.
Jen: But how large is your staff there?
Gary: between 30 to 40 in any given day
Jen: Countrywide.
Gary: Yes. But then, of course, our headquarters in Hong Kong has about 900 people.
Stephen: That’s why I assume you don’t communicate then with the State Council information.
Gary: Me personally?
Stephen: South China Morning Post with the State Council information office or the Propaganda Department of the Chinese Communist, publicity department.
Gary: This, very sincerely, is more of a question for Tammy and Chung Yan. We have, just like any other news organization, sources throughout the authorities. We have relationships with people throughout the central authorities. So I cannot blanket say that we have no communication with people in those organizations because some of them are part of our news reporting process. So I’m the wrong person to answer that. And, yeah, I’m frankly the wrong person to answer that.
Stephen: Do you think that a lot of people —
Gary: But, but very quickly, I do want to say this. The editorial agenda and the editorial voice and the editorial line of the South China Morning Post is defined by our editorial leadership in Hong Kong. I want to make that absolutely clear.
Stephen: We have visits from both the Hong Kong government and folks who are part of democracy movement in Hong Kong and the folks from the democracy movement will say that rule of law is being eroded in Hong Kong, that press freedoms are being eroded in Hong Kong and that you see it every day, and the future is actually not very bright. How do you respond to the democracy movement in Hong Kong? Because I’m sure when they’re here and they say that every day in Hong Kong.
Gary: How do I respond to the democracy movement in Hong Kong? Well, I mean our position as a newspaper is that we report on it. We don’t shy away from that topic. We don’t shy away from the complexity and the intensity of discussion and argument that exists in Hong Kong around the issue of elections, everything that to head in 2014 during the Occupy movement, and everything that continues to happen as a residual and ripple effect of that, even to this day. And I believe that our coverage of it is very balanced on both sides of the argument and we’re going to continue to do that.
Stephen: I have to say that this was before you were there that the South China Morning Post reporting on the Occupy movement was extraordinary and quite different from what the Western reporting was on the Occupy movement. It was much more nuanced, much more in-depth, much more talking to local police officers as to what’s going on, talking to the protesters, really giving folks an understanding of what actually went on and left you, left me at least, with very different conclusions from what readers of not your competitors but The New York Times, The Washington Post, and The Wall Street Journal concluded. It really was quite different, especially the interview with the superintendent who ordered the firing of the teargas, I guess.
Gary: Well, that’s the advantage of being there, by being in Hong Kong, in mainland China. The fact that we are there with lots of people and that we are a newspaper who is dedicated to this type of expertise and coverage, we can publish 10 articles a day about what’s going on on the ground. We can publish all the different points of view. When you’re The New York Times, when it comes to Occupy as an example, once every week, you get to publish that one wrap-up article on what is going on. You can’t, it’s just impossible to express that nuance when it’s one article a week.
Nick: What’s your mechanism for keeping track of what’s happening in the internet in China?
Gary: We have a lot of people that are watching it very, very closely. Not only our researchers in mainland China, but also a newsroom in Hong Kong as well. We report a lot on the censorship issues and the multiple different censorship issues that exist across the internet and distribution channels of information in mainland China that is part of our daily coverage. That is because of the fact that we are paying very, very close attention to it and we care deeply about it.
Stephen: What was interesting is, I told this story earlier, is that I gave a talk in Wuzhen, at the World Internet Conference last year, whereas, I have said to every Chinese official I’ve met with and say publicly where I criticized the Chinese government for blocking Facebook, for blocking Google, for blocking Twitter, for blocking YouTube. I say ultimately, China, in order to be a responsible stakeholder, needs to allow the Chinese people access to this under terms acceptable to China. And I gave the speech. And generally, the Chinese media reports on every speech I gave in China and in this one is was as if I wasn’t at the conference. There was no reporting whatsoever of my speech. In fact, when they talked about attendees at the conference, my name wasn’t there. So I thought it was a little surprising. The South China Morning Post, to its credit, put it on the front page and put exactly what I had said on the paper.
Gary: It worries me that you’re surprised by that because I know what a news organization should actually do.
Chris: Come on. Wait a minute. You should not be surprised by that. My name is Chris Merk and I’m with the Harvard-Yenching Institute and a number of other non-profits. It is a fact that the South China Morning Post is a rescue operation. It was in decline for a long time under Malaysian ownership, in which the people who really reported with what was going on with China one by one, we can name some of them, Willie Lam, etc., were exiled. And the quality of the coverage declined steadily. And I would have to say, in the last couple of years since Jack McCain is in the quality, the coverage has improved. But this is a rescue. This is not a transition due to the economics of the news business. This is an institution whose journalism standards were declining, which was patently subject to self-censorship from aided and abetted depressed by the ownership. And I’m actually quite pleased with what Alibaba is doing so far with it. But I think it’s always good to know exactly where you’re coming from. I’ve been reading the paper since 1965 and I lived in Hong Kong for two years. At that time, it was a paper of record for the English speaking residents in the government and others, not for 95% or more of the population who read the Chinese newspapers. I would not have considered it the paper of record in the last 10 years, 15 years of Hong Kong and I’m wondering what sense you consider it a paper of record today. And then I have bunch of other questions. Maybe you start with that one.
Gary:  I don’t know what you expect me to say in response to that question.
Chris: Well, it’s not my slogan. It is your slogan. “We are the paper of record for Hong Kong.” I know what The New York Times means when that say it and they the reasonable claim to that status in the United States. When you say that about the South China Morning Post in Hong Kong, what do you actually mean?
Gary: I will tell you this, from a metrics point of view, there are, in Hong Kong, seven and a half million people. There’s a two million addressable market place of English-language consumers. Everyone in the government is a consumer. We capture 99% of that readership on a monthly basis. And so in that sense, everyone who reads English language in Hong Kong, including leadership in government, in law, in the legal systems, in the business sectors, in education, we are the paper that they read.
Chris: The competition would The Standard and in that case, I agree with you. It’s a better English newspaper than The Standard, certainly. But if I were saying, okay, SCMP versus Ming Pao versus Ta Kung Pao, which is more important? I would say you’re ranking number 3.
Gary: We will disagree on that.
Jen: Amongst majority of the people, given that the majority of the people are not English speaking.
Gary: The reality is our penetration in Hong Kong now is greater from a percentage of population than it was 30, 40 years ago. And so the argument is if you’re saying that the newspaper was a paper of record 30, 40 years ago because the people in government and in leadership and in control of the city read out paper, and that was a small percentage of the population, I absolutely want to claim that now. I can tell you for a fact that it is still absolutely the case and, in fact, we have even greater influence because we have higher penetration across the overall population.
Douglas: Douglas Murray. I’m with the National Committee in various ways over the years. South China Morning Post and the China Daily, they co-exist. Do they pay any attention to each other?
Gary: In what sense? I read the China Daily on a daily basis because I want to know what Beijing wants the world to know. But that’s the extent of our relationship.
Douglas: In person, do you have any professional connections?
Gary: No. No partnerships, nothing. No professional connections.
Douglas: No, not partnerships but there’s a community of journalists. We would expect to interact. I’m just asking, do you do that?
Gary: Do they interact? I actually don’t know the answer to that. The China Daily, the journalists for the China Daily ever come onto my radar so I don’t know the answer to that. Maybe we run into each other. I mean, I’m sure we run to each other in the field, our reporters along with the China Daily’s reporters in Hong Kong and in other places too, but there are no formal relationships between the two publications and there won’t be any formal relationships between the two publications.
Douglas: I didn’t expect any formal relationships but the world of journalism is big enough for both that they don’t mix.
Gary: They don’t mix. I mean, the way that we approach journalism and what the objective picture of China looks like is different.
David: David Yates, President of the [inaudible – 00:37:35] China Association. I spent a long time living in Hong Kong and reading The Post for a long time. I was interested in the elder side of the conversation. When we started, you stated the big ambition of wanting to be globally read, especially in the United States. What is your strategy to become well-known? I’ve lived in Hong Kong so I got to know The Post. Everybody read The Post, all of the English speakers there. But across the United States, it is not very well-known, even across New York it is not one of the papers most people know of. I was interested in your assertion that you are in a unique position to be a spokesperson —
Gary: Again, be careful of the language area.
David: An amplifier of information on China or something like that because of your location and your history, But how do you become well-known?
Gary: So this is where everyone in this room can accuse me of being incredibly Millennial in the way that I view the world. I’m a product person. That is my background in the technology world. That is what I’m bringing, that I believe is unique, into the news industry. And so I think about this as a product problem. The reason why newspapers no longer have the one-on-one relationship and the control of our relationship with our readers is because we’ve allowed somebody else to make better discovery and make better products. So to solve this, it is a product issue. Now, for us in the United States, we know that the South China Morning Post is not a well-known brand. We know the South China Morning Post, even if people do know it is, well, when people see the brand the South China Morning Post, if they don’t understand our history, if they don’t understand what we’ve represented in the past, if they don’t read our product, the full main book, from front page to back page every single day, just the word “China” will lead to assumptions that are incorrect. So we were not tied to the historic brand. We care about it deeply but we were not tied to the brand in our push into this marketplace. So our strategy is that we have built new products under product brands. And we’re, in no way shape or form, hiding the South China Morning Post brand but we’ve built new products under new product brands that serve this market.
As an example, we’ve just launched a new product called Inkstone. That is the product brand. That is what in your engagement and relationship with us, with the SCMP, a lot of people are going to be engaging with the product and the brand Inkstone. What is Inkstone? It is simply six pieces of content a day that helps elevate your understanding of China. Some of those six are current events, things that happened in the last 24 hours. Some of those six are contextual. And what we are doing is we get to leverage our large newsroom reporting on China, and we get to repackage and contextualize what exists on SCMP.com for an international marketplace, for American readers who are curious about China but don’t really know where to start. In the SCMP, when I talk about Politburo Standing Committee, when our journalists write about Politburo Standing Committee members, we can use the name without having to provide context as to who they are. Here in the United States, we can’t. Certainly not with that demographic. And it’s certainly we’re not —  Inkstone is not a product for the people in this room.
Stephen: I get it.
Gary: So that’s what we’re trying to do. So we are we are trying to build a product that will help people who raise their hands, and we know that there is an increasing number of these folks, who’ve raised their hand to say, “I’m globally curious and now I know that China is important for me to understand better. I don’t know where to start.” Inkstone, here’s the product for you. So if you look at the product, the user experience is very different than SCMP.com. It’s very different than most news products in the world. It is targeted at a different demographic with a different use case. So we’re trying to solve this issue of their product and we have multiple others that have either already been launched or are coming.
Jen: All focused on China, some aspect of China?
Gary: Yes. We have another one that has also launched in this marketplace called Abacus, because we believe that the Chinese tech industry is massively underreported on. And then the innovations coming out of China, and also the concerns and the issues coming out of China, the tech industry, are worth exploring. And we do know that there are plenty of technologists around the world who want it but don’t have access to it. They have some sources of commodity news. So when the big companies invest in some company or somebody goes and lists on Hong Kong, Shanghai or New York, then that news will be in other global technology news sources. The in-depth inside analysis and understanding of who these people are and what these companies are and what the innovations are in China and what the concerns are about censorship and about monitoring all these things in China, there there’s not a lot of places with consistent high-quality news. And so Abacus serves that need for technology. That is different than Inkstone. So it is whenever we have news, we publish it. So that is more of an ongoing feed news.
Chris: So you go on the SCMP site and you subscribe to Abacus.
Gary: No. You go to abacus news.com. It is, again, a separate brand and we’re focused on growing that brand in international markets as well.
David: And do those brands benefit from the Alibaba relationship in any way? I don’t know if the can.
Gary: No. Not right now. Yeah. No. No. We don’t.
David: Because that’s a brand.
Gary: Yes.
David: So I’m wondering if there’s any way that you get to ride that.
Gary: That would be nice, wouldn’t it? But it will also probably affect our objective reporting on Alibaba. So, no. We don’t. Our relationship with Alibaba’s PR team is really, really it’s quite funny at times. We’re told often that well, we find out a lot about a lot of Alibaba news by reading it on The Wires or when it breaks on The Journal, and then we’ll ask why. We weren’t part of the initial embargo pitch and we’ll be told that we have to earn our place at that table. And it’s true.
Stephen: Do you disclose in every article about Alibaba, that you are owned by Alibaba?
Gary: We do. That is standard news practice and organizations like ours have to, should.
Stephen: Because CNBC, they’re always — whenever they’re reporting on Comcast, they were always saying: “Well, of course, this is our parent company.”
Female Participant: Hi, [name – 00:44:19] and I used to be a journalist in China [inaudible – 00:44:21]. A couple of different questions. One, could you talk a little bit more about the firewall issue between you and Alibaba? Alibaba is just so massive, so many ventures and so many subsidiaries and you probably can’t mention the fact that in every single article. I mean —
Gary: We try.
Female Participant: [inaudible – 00:44:42] So what’s your protocol for that firewall between the two of you? And then another question about —
Gary: Can I just go one at a time? Terrible memory. You go to a second question, I’m not going to answer either of them well. On the first one, structurally, the firewall, our governance structure is that I report into a board with Alibaba folks and non-Alibaba folks. We are very unique in that way, in the Alibaba family of companies, because everyone else reports into — anyone that’s wholly-owned, certainly, reports into a division of Alibaba. A lot of people assume that Alibaba has a media division. We do not report to the media division. We’re separate and we have our own board and that was by design because of editorial independence. So we do not take any instruction whatsoever. My relationship with my board, and I think that this is why they trusted me, as a startup and technology guy, to be able to leave this company as chief executive, my relationship with the board is that once every year I go, like if I’m fundraising, with an annual strategy, and annual plan, and a budget and go raise money from Alibaba, from the board. And I have, at least right now, I’ve been two for two, which is great news for us, and raise the money that we believe we need and then we go and operate independently. I meet with the board only one other time per year. There’s a mid-year review to make sure that our metrics are going the right direction, that our products are being launched on time, that there are no major critical issues of personnel or what not. So that’s our relationship with our board and that’s our primary relationship with our owners.
Stephen: Hopefully, one day you’ll be making money and you won’t have to go to the board.
Gary: That would be nice, wouldn’t it?
Stephen: If you got to go back every, that’s going to be a problem after a few years, as a former owner.
Gary: Well, first of all, yes that is our aspiration is that we will, in an X number of years, and I’m not going to reveal the X, hopefully sooner rather than later, become self-sustaining. But I’m also, being a start-up guy, very used to asking for money and I’ve gone very good at it over the years.
Jen: Are you doing it in our board?
[laughter]
Gary: I certainly am way too under qualified for that. So with regard to coverage, and it’s a very interesting question you asked there, the firewall is very strong between our organization and PR and information coming out of Alibaba. We are completely off of the Alibaba employees’ systems, completely separate employee systems, so that there is no access to internal, potentially proprietary information. And again, by design. And very, very important for a news organization like ours to have those kinds of firewalls set up. In our reporting, when we do mention Alibaba, to say that Alibaba owns the South China Morning Post, that happens when we feel like it’s important to mention Alibaba in the story. So if it’s an investment, if the investment by Alibaba is large enough for Alibaba in that ecosystem to actually matter, then we will mention the fact that Alibaba owns the South China Morning Post. So the editorial team has a very, very clear guidelines on that, as well.
Nick: How do you measure —
Female Participant: My second question was related to the money question that you were just talking about. So you’re the envy of all positions for you have actually pretty deep pockets for a news organization. You talked about some of the spending already, the new headquarters, you have [inaudible – 00:48:09], what have you spent on so far and what do you plan on spending on moving forward?
Gary: So the three areas we have primarily spent on, number one, is editorial. So we have grown our newsroom significantly since — well, in the last 12 months, I think, we’ve had 80 plus new hires, in the last twelve months, across our newsroom. And our newsroom is now, I think, 340 people. It will get to 350 in the next month or so. That’s our target for the first quarter of our fiscal year. And the second thing, also people. We have massively increased our technology expertise. So when I arrived in January of 2017, we had 40 people, and one team that covered both front end consumer, product back-end infrastructure, as well as traditional IT. So serving literally all our employees. That 40-person team got split in two, and now we have 120 people across those two teams. So we’ve tripled the size of our technology expertise. And that’s not even counting for the analytics and insights teams that we’ve hired, that we’ve built, as well as all of the technical expertise that now exists not only in the newsroom but also across all the operating units. So massive investment in that. And the third one is building new product and launching them in new marketplaces. Of course, some of that is marketing spend, but a lot of that is executive and leadership mind share. And we are taking our resources and our time and spending a lot on figuring out what the needs are in the international marketplace and how we can best serve it.
Nick: What are the metrics by which you measure whether or not you’ve achieved your goals?
Gary: Yes. Great question. Three simple categories: reach, engagement, and impact. Reach is nice and easy. It’s just scale of numbers. And the platforms that we work with our own internal data will allow us to see that pretty clearly. And growth has been significant. Although I’m not going to give you absolute numbers, Steve tried to squeeze that out of me earlier, I did not give in to him. But I will tell you that our overall online traffic has more than tripled in the last 15 months, and our international traffic used to be a little under 60%, now it’s over 80% like I mentioned. The second one, engagement, is also easy to see. How many times people come back in a week or in a month? What percentage of our user base are regular users? And we have a clear definition of what regular and loyal users look like. That’s growing. It’s growing steadily. I want to grow it exponentially so that is something that we still have to work on. The amount of time on page is actually quite high for us compared to other news organizations because I think that those who want to be engaged will read a lot. And so the recirculation, the number of page views per session, all these numbers are all trending in a very positive direction for us. The third one, impact, is a really, really hard one. And we still haven’t figured out how to measure it properly, and we want to be responsible for this. I can throw out stats on the massive increase in citations that we’ve been getting, and us being the backlink source of China news over the course of the last 18 months. And hopefully it is, to Christian’s point, because the overall quality, not just the density but the quality of our reportage has improved over the last year and a half. But that in itself is not necessarily a fully accurate, a qualified indicator. Now, we’re trying to figure out other ways to measure it. We do care about exclusives and scoops. We think that one of the unique propositions we have is that, because of our access and because of our understanding and our knowledge, we’ll be able to provide exclusives in a way that others can’t. So recounting how many exclusives we were able to publish.
A lot of people ask me about Breaking News, whether or not we want to own Breaking News out of China, outside of that world of exclusives and scoops. Breaking News is something that in the commodity news where we live in 2018 is going to be owned by other people. It’s either going to be owned by social media, because even journalists now are starting to break news by themselves, under their own personal brand, to the absolute abhorrence of the news of platforms and news companies that they work for themselves, but also the wires are just so precise and so good at this point. Our value, I don’t think, at the end of the day, will be to break commodity news on a daily basis, but those exclusives and scoops, and the deep insights analysis that again elevate our overall understanding of what’s going on. So that was a long-winded way to say. For impact, I’m still not sure and we’re testing a bunch of things and again, hopefully, we will land on something that you guys would also agree with me on.
Stephen: Profitability is not a metric?
Gary: I did not mention it, did I?
Stephen: You did not. As a former investor, I was quite shocked. You’ll get a call from me tonight, if I was still an owner.
Gary: You would. You would. I’m sorry, I would. Revenue matters to us.
Stephen: This is a real start-up guy. We’re talking about profit, they talk about revenue. That’s the difference with traditional investors and startup investors.
Gary: You know us well. We made a choice. Our ownership, along with our executive leadership, has made a choice to go into investment mode. That is a tech guy’s way of saying we are unprofitable. That is a choice. We can be profitable because we still have very, very material top-line revenue on an annual basis. So it’s not like if we’re not making any money, it’s just we’ve decided to spend more than we’re making because we want to invest faster in technology, and in editorial, and in new markets. That won’t last forever. That can’t last forever for two reasons. Number one, profitability is the only way to ensure that a news organization like ours has held self-accountable to the quality of our journalism. Because we need to make sure that you’re willing to pay for it. Not just that you’re willing to read it for free and know that your data is being sucked in by these ads and being monetized some other way, it is that you’re willing to pay for, I have to close that gap between how much it costs and how much you’re willing to pay for it. So profitability or aiming for profitability keeps me accountable to quality. Number two, that’s the only way to long term commit to editorial independence, so that I don’t have to go ask for a patron. So in that sense, I am acutely aware of the importance. And even though profitability is not one of our key measurements of success today, top-line revenue and not atrophy when it comes to revenue generation and revenue growth, the discipline of revenue growth in our news organization is still all of utmost importance for our leadership team.
Stephen: One of the things we do regularly at the National Committee when we’re in Beijing is we gather American journalists together and they brief our delegations. They don’t actually ask our delegations stuff. They like congressional staff, congressional members —
Gary: How do you manage to get journalists not to ask you questions?
Stephen: Well, we do manage.
Jen: We say it right up front. We say it is a role reverse.
Stephen: Because they have a real agenda with the groups we bring which is to basically tell them about the difficulty that they have in reporting on China, that they will often recount stories that they go to up to Harbin and they get off the plane and they’re invited for tea immediately after getting off the plane, and their sources, after they leave, are questioned by the local authorities as to what was discussed in an attempt to get them not to talk. How can you expand your coverage of China in that environment? Question one. And question two is the number of reporters that you have limited by the Chinese government.
Gary: You’re asking for the number, that second equation?
Stephen: No. So the two questions is: In this environment, how do you become, how do you grow your business and second is your numbers, literally your numbers, limited the way The New York Times, The Wall Street Journal, The Washington Post are?
Gary: So I am, again, not the right person to be able to give precise answers on this, but I will answer it. We deal with the same conditions that everyone else is dealing with with regard to reporting and access in China. We have to get the same visas through the same channels to get foreign correspondents into mainland China. So this is something that our managing editor and as a representative of our massive leadership is also acutely aware of, it’s something that we have to deal with. It is a situation and the conditions have changed over the course of the last year. And we expect that change to — I mean, we don’t expect it to change back. And so it’s something that, as a news organization, we are learning to operate in a new environment. But it’s also not an environment we haven’t seen before. Another advantage of having long institutional memory and having an organization that has reported on China for 115 years is that there are experiences and we have journalists who’ve been with us for 30, 40 years who are able to still educate our younger class of journalists, our new journalists, on how to operate in those environments. What we’ve loved, as well, by the way, and it’s funny that we’re looking to American press at times for reminders, is at the start of last year, Steve Adler who’s the editor-in-chief of Reuters, sent out a memo to his newsroom about the changing conditions of reporting in the United States, as well, which have, since January of 2017, we’ve seen how really — he wasn’t exactly that impression, he was just kind of narrating what was going on. But it has certainly continued. That memo reminded journalists in his newsroom what it means to be a journalist, how to operate as a journalist, that we are not there to get handouts from authority, that we are there to go and report. And it was a good reminder for our news organization, as well. Not to say that we got complacent in our reporting, but certainly, I think, conditions, they do fluctuate and it’s a good reminder when conditions change how, as a newsroom, we have to continue to be good journalists.
Female Participant: [inaudible – 00:58:52]. My question is how receptive are the Chinese officials, you being English and media and also 100% blocked in China. Would you ever request for interview request to Chinese officials and ask them to talk to you. If they don’t, as a reader, I may refer back to China Daily in order to get the more comprehensive reports.
Gary: We, of course, ask them for interviews all the time and we often get interviews. We have opportunities to speak with them. I don’t know what percentage of them turn us down and certainly those change from situation to situation. They are certainly case by case. As we know, when we get to talk to officials on the record in China, it’s because they have something to say. They have something that they want the world to know. So our newsroom is well aware of that. That’s how we operate. And it’s honestly not any different anywhere else in the world, but we also know that we have to contextualize any of those interviews properly. Honestly, we have — I believe that our reporting are our access to officials for things that matter. If you read our coverage on a daily basis, it is quite comprehensive. It’s quite comprehensive. It’s certainly better than some of the other global media players, most of the other global media players in China. Again, that’s part of the advantage that we have. First of all, we conduct a lot of those interviews in Chinese. Not all of the global media companies can say that. Second of all, I believe that because of our history —
Stephen: Are all of your reporters bilingual?
Gary: The mass majority of them are. It is actually a requirement now for our reporting core in mainland China is to be bilingual. So that is important and increasingly, we are seeing to our great delight, international journalists who have studied Chinese since high school, graduating from the world’s great journalism schools and coming and working with us. It’s a great change in the environment. So now, I totally forgot what I was going to say. Really, over a hundred years, I do think that we are a voice that is born out of Asia. And being a voice that’s born out of Asia, allows us more nuance and texture than others and officials tend to trust that more. So they do. If you were to ask, if you were to take, I don’t know, how anyone could possibly do this, but get a sense of trust level between Beijing officials and news organizations, I can tell you that we’ll rank above other global media organizations. And our access and their willingness to actually be interviewed by our reporters, not only in China by the way but here in the United States, we have — by the way, out of these three microphones, the most dangerous one is the little tiny one because it belongs to Rob Delaney, our US correspondent. I know that guy is going to cash me on everything wrong that I say, and be the most critical person in the room about everything I say. But if you ask Robert, our access to those same officials here in the United States is also something that we pride ourselves for, as well. And you’re right, it does allow us to tell part of the picture in a way, in a format, in context that hopefully means you’re not always going to China Daily for the story.
Jen: Where else do you have correspondents around the world, other than Robert?
Gary: So we have New York, we have DC in the United States. Obviously, a number of bureaus on mainland China, and we have reporters scattered around Southeast Asia, and we have a reporting core that is able and willing on the drop of a dime to travel. Again, privilege.
Jen: But no one in Europe?
Gary: No. No one is stationed in Europe. Africa is something that we — the China story in Africa is unbelievable. So we have sent reporters, we’ve worked with freelancers. I would not be surprised if we decide to invest in a bureau in Africa in the next year or so. But again, being based in Hong Kong, that incredible airport allows us to travel fast to anywhere in the world.
Stephen: One of our board members wrote a story on media inaccuracies in Africa relating to China. We only have time for one more.
Gary: Mostly because I have a dinner with my wife that, again, if I am late for, I will be under more of a spot like and more critique than the last hour we spent together.
Kristin: Kristine Greene from the Institute of International Education. I’m not going to ask about education. Is your model replicable? Is your defensible position here competitive advantaged the model or is it the geography?
Gary: Well, the geography is the model and it is unique. I think that if there is a model that we ascribe to that is replicable across news organizations, it is expertise. Might be niche but you can make money off of niche. You can be incredibly profitable off of niche. You can add value to the world not by becoming the next The New York Times, but being the expert on something that people care about. Because here’s what the Internet has done in democratizing information. They made us so that there is no such thing as a niche topic anymore. When we used to say niche, it was because 5,000 people in the United States cared about it. There’s no such thing as a 5,000 person community anymore. Any tiny specificity of topic and detail has followers and interest groups that are millions large. As an example, by the way, I came from Spotify. I mentioned this earlier. One of the stories I love to tell is that at one point, we were working with an artist on a very specific type of Eastern European wedding music. It’s very random and we thought there’s no way we’re going to actually promote this type of music because there’s not going to be a market place for this. And when we did release something to do with Eastern European wedding music, we saw in the first week, five and a half million people care about it. No such thing as niche anymore in the internet. So if you have a subject matter expertise, you can become influential, you can make an impact, and you can be profitable.
Stephen: Gary, if this hour is any indication, the 115-year old SCMP is really fortunate to have you as the CEO. But thank you so much for sharing this incredibly valuable information with us.
Gary: Thank you so much for joining me.
[applause]