Saturday, August 30, 2014

Jill Abramson's ouster from the New York Times

Last week, someone leaked a copy of a New York Times report on innovation that is shockingly good. It clearly identified the major problems facing the newspaper in an increasingly digital world, and it made some smart recommendations for transforming the Times into a "digital first" publication. If the Times were to follow them, it would have a large and positive impact on the paper. And the fact that the team behind the report was led by Arthur Gregg Sulzberger, the heir to the Sulzberger family that controls the paper, ensures that it will be taken seriously.

Nevertheless, translating the report's recommendations into action will be very difficult. As Ezra Klein points out, the report includes an excellent summary of Clay Christensen's concept of disruption. The report correctly observes that publications like Buzzfeed are posing exactly the kind of disruptive threat Christensen wrote about. But what the report doesn't mention is the sobering conclusion of Christensen's research: companies faced with disruptive threats almost never manage to handle them gracefully.

Customers in control

Why is it so hard to deal with disruptive threats? The reason, in a nutshell, is this graph from the Times report:


After almost two decades of publishing on the web, the New York Times still earns less than a quarter of its revenue from its website. The Times report talks a lot about becoming a "digital-first newsroom," but financially speaking, the Times is still a print-first publication. That's going to be true for several more years at least.

This matters because, as Christensen emphasized, businesses are effectively hostages to their own customers. Businesses become successful by relentlessly focusing on their customers' needs. They develop systems for ensuring that every part of the business is focused on things that will maximize customer satisfaction and — accordingly — revenue.

Over time, the processes and attitudes necessary to succeed in a particular industry become embedded in an organization's DNA. People who demonstrate a knack for serving that industry's customers get respect and promotions. New employees learn attitudes and procedures that help the organization satisfy existing customers and cultivate new ones.

The innovator's dilemma

Most of the time, this cultural DNA is a huge strength. But it can become a liability when a company is threatened by disruptive innovation. Disruptive companies develop simpler, cheaper products that initially serve a different audience than the core customers of incumbent companies. (BuzzFeed, for example, started out with cat videos and quizzes before it started publishing "serious" news.) And crucially, profit margins are usually lower in the new market than they were in the old.

Changes that make a news organization better at serving digital readers and advertisers almost inevitably means serving print readers less effectively. And when the leaders of a newspaper like the New York Times propose changes designed to make the organization more web-savvy, the cultural DNA that has served the company well so long becomes an obstacle. After spending decades working to make their organization better at serving print customers, they naturally resist changes that will make them worse at serving those same customers. And in many cases, they have the financial numbers on their side. Web-native publications like BuzzFeed, Business Insider, and the Huffington Post are growing rapidly, but none of them have revenues anywhere close to those of the New York Times.

A good example of this principle in action is the New York Times paywall. None of the company's digital-native competitors have paywalls, and for good reason: to succeed online, you want as many readers as possible. It's hard to be sure, but it seems likely that the paywall is a factor in the slow growth of the paper's web traffic. And while the paywall is lucrative in the short run, the Times is likely forgoing higher advertising revenues it could earn with a larger readership.

But the primary purpose of the Times paywall isn't to generate revenue, it's to prevent people from canceling their print subscriptions. That's why the company actually charges less for a print subscription with digital access included than a stand-alone digital subscription. (For example, a Monday through Friday print subscription is $7.20 per week, and comes with a digital package that costs $8.75 per week when purchased alone.) The company is — rationally — choosing to hobble its web-based product to avoid cannibalizing its lucrative print business.

Clay Christensen's The Innovator's Dilemma is full of examples like this. For example, in the 1980s DEC was a successful provider of expensive computers being disrupted by much cheaper PCs from Apple, IBM, Compaq, and others. DEC clearly understood the competitive threat from the PC. The company tried four times to respond with cheaper PCs of their own. But each time, the company found it too difficult for a company used to the high profit margins of more powerful computers to make money in the highly competitive PC business. So none of DEC's PCs took off, and by the 1990s DEC had become a minor player in the computing industry.

The lessons of history

This is a story that has played out over and over again. Companies with brilliant executives who clearly understood that they were facing disruptive threats still failed to survive them. It's happened in industries as diverse as steel, hard drives, and steam shovels. Many of these companies tried hard to adapt to changing circumstances and introduce new products that took advantage of new technologies. But they were hobbled by the fact that it's inherently difficult to transform an organization built to serve customers in a high-margin business into an organization that can survive in a lower-margin business.

As I've written before, a newspaper is a large, bureaucratic institution whose every department is carefully crafted to maximize its profitability as a publisher of newspapers. It owns printing presses, warehouses, delivery trucks, newspaper boxes, and other assets that are totally useless for publishing a website. It has a large staff of paper carriers, sales representatives, typesetters, customer service representatives and so forth who would have to be retrained or (more likely) laid off. And most importantly, it has an institutional culture that’s fundamentally about publishing newspapers. The New York Times can’t stop printing newspapers any more than DEC could have just stopped making the high-margin computers that made it successful. Doing so would have meant discarding the vast majority of what made the company valuable.

And as long as the New York Times makes the majority of its income from its newspapers, that will exert an inexorable pull on the culture of the newsroom. Reporters and editors will resist changes that undermine the quality of the newspaper by pointing out — correctly — that print subscribers pay the majority of the bills. Executives on the business side will resist reader-friendly changes to the website out of fear that they will undermine demand for the print product.

The bottom line is that even when executives clearly understand that they're facing a disruptive threat and work hard to address the problem, they still fail most of the time. This part of Christensen's message tends not to be widely emphasized because Christensen himself downplays it. In the introduction to the Innovator's Dilemma, he wrote that "colleagues who have read my academic papers reporting the findings recounted in chapters 1 through 4 were struck by their near-fatalism." But he then goes on to reassure readers that "there are, in fact, sensible ways to deal effectively with this challenge."

Yet Christensen never really delivers on this promise. He offers some ideas for coping with disruptive innovation, but he finds only a handful of examples of companies that have (narrowly) escaped bankruptcy, compared with many companies that simply went broke.

It's not surprising that Christensen chose not to emphasize this aspect of his research. He was, after all, writing a book he hoped business executives would buy, and a book that explains how to save your business is going to be more popular than a book about how your business is inevitably doomed. But the reality is that most businesses threatened by disruptive innovation don't survive. So even if the senior leadership of the Times accepts the findings of the Times innovation report, they're going to find it a huge challenge to make the kind of dramatic changes that will be required for the Times to master the web.

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One of the best parts of New York Times' innovation report (summary here, full document here) is page 16's insanely clear explanation of "disruption":


Over the past couple of years, a disruptive product has become a buzzword meaning, roughly, "a new thing that a lot of people buy." But that's not what's useful about the idea of disruption at all. The original theory comes from Clayton Christensen's study of things like the hard drive and steel industries where he realized that disruptive products tend to combine new technologies, cheaper production, and — crucially — worse products.

That last bit is the key: it's the poor quality and low profit margins of the new product that prevent the incumbent business from recognizing the threat. But as the competitors experiment with the new production technologies they become better able to produce high-quality, high-profit products than the incumbents, and they eventually move up the value chain and disrupt the incumbent's core business.

There are lots of threats that aren't disruptive. USA Today, for instance, has a huge web site and is doing some really interesting things online, but they're just a direct competitor to the NYT. They're doing more or less what the Times does and trying to do it better.

Conversely, Buzzfeed is a disruptive threat to the New York Times. They began leveraging technology to churn out aggregated videos and light listicles that are targeted at generating social shares. Their content was — and is — much worse than what the New York Times offers. But they're getting better fast. Now they're using their technology advantage to also do foreign reporting and feature journalism in ways that are much better suited to the social web and much cheaper to produce.

I've read a lot of descriptions of how disruption works. But the New York Times' three-part infographic here is easily the clearest explanation I've come across.

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One reason gender and pay issues have so dominated the conversation over Jill Abramson's ouster is that there's a vacuum to fill. As of yet, there is no obvious performance-based explanation for her ouster. The New York Times was doing tremendous work under her leadership. They were winning prizes. They were improving the web site. They had just launched a widely admired new vertical in The Upshot. They were, shockingly, profitable. That's an unusual context in which to fire the top editor.

Arthur Sulzberger Jr.'s statement on Abramson's firing is, by far, the fullest explanation yet. But it raises at least as many questions as it answers. This paragraph, for instance, contains some pretty severe charges:

During her tenure, I heard repeatedly from her newsroom colleagues, women and men, about a series of issues, including arbitrary decision-making, a failure to consult and bring colleagues with her, inadequate communication and the public mistreatment of colleagues. I discussed these issues with Jill herself several times and warned her that, unless they were addressed, she risked losing the trust of both masthead and newsroom. She acknowledged that there were issues and agreed to try to overcome them. We all wanted her to succeed. It became clear, however, that the gap was too big to bridge and ultimately I concluded that she had lost the support of her masthead colleagues and could not win it back.

None of these charges are substantiated, which makes sense given that Abramson and the Times appear to have signed a non-disclosure agreement around the circumstances of her firing. But the Times is a very, very big newsroom full of people who know exactly how to get their side of a story out. If Abramson had been publicly mistreating colleagues, for instance, it's likely that that charge would be substantiated whether the Times wanted to release the information or not. If she had been making dangerously arbitrary decisions that imperiled the institution, it wouldn't have stayed private for long. But aside from a few anonymous (and pretty banal) anecdotes in a 2013 Politico story, there's nothing to point to. A few weeks before Abramson was fired, Mark Thompson, the CEO of the New York Times, was telling Abramson he wanted her to remain editor for many more years.

The overwhelming reaction to Abramson's ouster within the Times was shock — and, now, confusion. That's telling: if Abramson had been such a nightmare requiring such constant management from Sulzberger it seems likely that more Times employees would have seen the writing on the wall. Similarly, the public response from Times journalists weighing in on Abramson's ouster seems to be sadness rather than relief:

It's possible, of course, that Abramson's allies are being vocal — both on and off the record — while her detractors are a silent majority. That's the view of Ravi Somaiya, a Times media reporter:

That may well be right (more from Somaiya here). But given that Sulzberger feels besieged enough to make an angry public statement on this it's hard to believe Abramson's critics wouldn't be leaking a bit of their narrative if they were indeed so numerous. And it still doesn't explain why the move so stunned a newsroom that Abramson had supposedly alienated so totally, and that had apparently been complaining to Sulzberger so frequently.

Behind all this lurks a very simple explanation from Abramson's ouster: the New York Times is a family-owned business and Abramson didn't get along with the patriarch. The problem is that's not an explanation Sulzberger can offer, even if it's the true one — and, in a family-owned business, a perfectly reasonable one. The Sulzbergers have been extraordinary stewards of the Times. But they know full well that neither the Times' employees nor its readers want to remember that the paper is ultimately subject to the whims, wants and preferences of the family that owns it — at least not at a moment like this, when that family appears to have stumbled in managing such an important transition.

If there's a bright side of all this for the Times, it's that the incoming editor, Dean Baquet, is beloved in the newsroom. For all the controversy over firing Abramson there's been virtually no dissension over the idea that if the Times isn't going to be led by Abramson it should be led by Baquet. It's a shame that he'll take over under such controversial conditions, but there's little reason to worry for the future of the Times.

Disclosure: I am married to New York Times economic policy reporter Annie Lowrey.

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On Sunday afternoon, New York Times media reporter Ravi Somaiya tweeted out his observations on how Times staffers felt about the firing of Jill Abramson, their executive editor.

One of the more fascinating bits is that there are two small camps within the Times newsroom — one that "is devastated she [Abramson] is gone" and another that "clashed with her." And as Somaiya explains, the reason we're not hearing more complaints about Abramson's work is that they feel like pointing out Abramson's faults would be piling on. In short: Somaiya argues that many more people were upset with Abramson's behavior and management than what we've heard.

A couple more tidbits: the general feeling is that the change was needed, but that the transition has been a flop. And echoing what reporter Lydia Polgreen said, Somaiya reports that "almost nobody ... thinks her gender or pay were significant factors." Here's a collection of Somaiya's tweets:

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When Jill Abramson became executive editor of the New York Times, it was seen as a step forward for women in journalism. But by a number of measures, women's progress in journalism had slowed to a crawl.

According to data compiled by the Pew Research Center, the share of women at newspapers has fallen slightly since 1998, from 36.9 percent then to 36.3 percent as of 2012. The share of women in supervisory positions has likewise barely budged, moving from 33.8 percent to 34.6 percent.


It isn't just that women's growth is flat at newspapers; according to a recent report from Indiana University, it has tapered off for all journalists.

That report, whose data comes from surveys of media organizations, finds that women in journalism boomed from 1972 to 1982. In that period, the share of journalists who were women jumped from one-fifth to more than one-third. But after that, it leveled off. In fact, in 2002 it was even lower than in 1982.


There was an uptick between 2002 and 2013, but the sort of explosive growth that we saw in the 1970s and early 1980s is gone.

It may seem surprising that women make up just under 38 percent of all full-time journalists. But then, women only make up around 43 percent of all full-time workers nationwide, suggesting that journalism may not be so far from the norm.

While the share of women in journalism has flattened a bit, so has progress toward closing journalism's gender pay gap, according to Indiana's survey respondents.


Interestingly, that's not because women's pay has risen; rather, men's pay has fallen. According to Indiana's data, women in 1970 made around $45,600 in 2012 dollars, compared to $44,342 in 2012. Men, meanwhile, saw their pay fall from $70,742 to $53,600.

So what's behind these figures? One factor may be men's seniority. The longer-tenured the journalist, the more likely he is to be a man.


As for why this seniority divide has happened, that's tougher. There could still simply be a hangover from the days of the 1970s, when men outnumbered women to a greater degree. This could also to some degree be a sign of women "opting out" once they have kids, a phenomenon that happens in many occupations.

But what it does show is that Jill Abramson, who had been involved in journalism for more than 40 years, was one of the relatively rare experienced women in journalism. That lends even greater weight to Abramson's status as executive editor — a long-tenured woman journalist in an industry where long-tenured women journalists are outnumbered two to one by men.

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Lydia Polgreen, the deputy international editor at the New York Times, took to Twitter Saturday evening to offer her perspective on the Jill Abramson dismissal and the question of whether gender played a role. Her view is that we should all recall that there are many women in prominent roles at the Times, and they would be in open revolt if they felt this was a decision driven by sexism. As of yet, she says, they're not:

Read our complete coverage of Jill Abramson here.

On Saturday afternoon, Times publisher Arthur Sulzberger, Jr., released a statement defending Abramson's firing as a decision that stemmed from her poor performance as a manager and not as a result of gender or disputes over pay.

"I concluded that she had lost the support of her masthead colleagues and could not win it back," Sulzberger wrote, adding that he had "heard repeatedly from her newsroom colleagues, women and men, about a series of issues, including arbitrary decision-making, a failure to consult and bring colleagues with her, inadequate communication and the public mistreatment of colleagues."

Sulzberger also fired back at reports that Abramson's earned less than Bill Keller, her predecessor as executive editor. The New Yorker's Ken Auletta had broken the news that when Abramson first took the job in 2011, her pay was $84,000 less than Keller's $559,000 that year. Sulzberger said that Abramson's total pay package was 10 percent higher than Keller's at the time that she left.

"[I]t doesn't help to advance the goal of pay equality to cite the case of a female executive whose compensation was not in fact unequal," he wrote.

Sulzberger said that the Times' other women leaders and young reporters "do not look for special treatment." That said, the Times has a gap when it comes to women writers.

As the Times' public editor noted in a column published just two days before Abramson's firing, the Times has the lowest representation of women on its pages among the 10 top newspapers. According to a recent study from the Women's Media Center, with 69 percent of its bylines coming from men.

Read the full statement, as reported by the Times' Ravi Somaiya, below:

Perhaps the saddest outcome of my decision to replace Jill Abramson as executive editor of The New York Times is that it has been cast by many as an example of the unequal treatment of women in the workplace. Rather than accepting that this was a situation involving a specific individual who, as we all do, has strengths and weaknesses, a shallow and factually incorrect storyline has emerged.

Fueling this have been persistent but incorrect reports that Jill's compensation package was not comparable with her predecessor's. This is untrue. Jill's pay package was comparable with Bill Keller's; in fact, by her last full year as executive editor, it was more than 10% higher than his.

Equal pay for women is an important issue in our country - one that The New York Times often covers. But it doesn't help to advance the goal of pay equality to cite the case of a female executive whose compensation was not in fact unequal.

I decided that Jill could no longer remain as executive editor for reasons having nothing to do with pay or gender. As publisher, my paramount duty is to ensure the continued quality and success of The New York Times. Jill is an outstanding journalist and editor, but with great regret, I concluded that her management of the newsroom was simply not working out.

During her tenure, I heard repeatedly from her newsroom colleagues, women and men, about a series of issues, including arbitrary decision-making, a failure to consult and bring colleagues with her, inadequate communication and the public mistreatment of colleagues. I discussed these issues with Jill herself several times and warned her that, unless they were addressed, she risked losing the trust of both masthead and newsroom. She acknowledged that there were issues and agreed to try to overcome them. We all wanted her to succeed. It became clear, however, that the gap was too big to bridge and ultimately I concluded that she had lost the support of her masthead colleagues and could not win it back.

Since my announcement on Wednesday I have had many opportunities to talk to and hear reactions from my colleagues in the newsroom. While surprised by the timing, they understood the decision and the reasons I had to make it.

We are very proud of our record of gender equality at The New York Times. Many of our key leaders - both in the newsroom and on the business side - are women. So too are many of our rising stars. They do not look for special treatment, but expect to be treated with the same respect as their male colleagues. For that reason they want to be judged fairly and objectively on their performance. That is what happened in the case of Jill.

Equality is at the core of our beliefs at The Times. It will always be.

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Concurrent to the dramatic firing of top editor Jill Abramson, the New York Times has been in the news thanks to the leaking of a 96-page Innovation Report that offers a scathing internal assessment of the paper's digital strategy. It is the most thorough look at the insides of the most important newspaper in the country that we have ever seen. What's more, in keeping with the high standards of the New York Times it's simply an excellent piece of reporting and analysis.

What's the report's basic critique of the Times?

The report identifies a number of operational shortcomings of The New York Times' digital operation, mostly related to things like optimization of content for search and the packaging and dissemination of content on social media. Beyond that, it offers three key structural critiques of the way the paper operates:

  • A dysfunctional internal organization that mis-places the "wall" between business and newsroom operations — church and state in Times talk — in a way that hurts digital.
  • A print-first mentality that continues to be dominated by thinking about the first page of the print paper ("Page One").
  • An editorial leadership team that's so busy managing the daily news cycle that they don't have time to think about broader strategic issues.

Why is the Times worried?

The report details a number of troubling digital trends for the New York Times, namely declining traffic to the home page and declining time on site even as Buzzfeed has grown rapidly to overtake the Times in total audience. In essence, as digital behavior has become more driven by social media the Times' traditional strategy of relying on the strength of its brand to encourage people to go find the news they want is failing.

Who wrote the report? Why does it matter?

The report was written by an eight-person team led by Arthur Gregg Sulzberger, a reporter with the Times who also happens to be the son of the current publisher and the grandson of the previous publisher. The report is significant in large part due to his involvement. The Times is a family-controlled business and Sulzberger is the heir apparent. Nepotistic management structures have their downsides, but this is a situation where they can be advantageous.

In a conventional large, established organization it would be impossible for a relatively junior member of the staff to deliver this much "real talk" to the bosses and rank-and-file staff would be unlikely to cooperate in a serious way with this kind of endeavor. But Sulzberger isn't going to be fired no matter what he says, and he has a larger stake than anyone in the long-term future of the Times so the incentives are aligned for a rigorous assessment — and possibly even real follow-through.

What does the report say about the business/editorial wall?

The Times has traditionally maintained a wall between business operations and editorial operations, metaphorically described inside the institution as the separation of church and state. The purpose of this is to ensure that advertising imperatives do not undermine editorial integrity, and also to allow business staffers to truthfully tell advertisers that they cannot be held responsible for editorial content. As the Times moved into the digital world, many aspects of the digital operation — including the Design, Technology, Consumer Insight, R&D, and Product groups — were considered part of "the business side" of the Times and thus walled off from regular interaction with the newsroom.

The report tells the story of a developer being forbidden from attending a newsroom brown bag lunch on church/state grounds, and offers much evidence that journalists and technologists consider excessive interaction and collaboration to be "inappropriate" in a way that hampers the development of compelling products.

What's Page One? What's digital first?

The first page of the print edition of the newspaper is known as Page One with capital letters. The report details the extent to which Page One is the heart of the daily routine of the newsroom, with the most important editorial meeting also being called Page One, and reporters and editorial groups assessing themselves largely in terms of their ability to score Page One stories. This remains the case even though digital is not just the future of the New York Times but largely its present. The Times' digital audience dwarfs its print subscriber base, but the editorial workflow is built around Page One and the newspaper.

The report urges a "digital first" strategy and emphasizes that this means more than literally putting a story on the internet before it appears in a print newspaper. Digital first is a state of mind in which the job of the newsroom is to deliver an excellent digital product, which a relatively small team would then repackage as a daily print product. Today it's largely the reverse. Deadlines are structured around the pace of print, incentives are structured around Page One, and then teams of producers build a website out of what's really a print workflow.

Where does the report fall short?

For a generally no-holds-barred examination of an institution, the innovation report is a bit oddly complacent about the Times' journalism. It asserts at various points that it is the best journalism in the world, but doesn't seriously try to scrutinize this claim. Certainly if you judge the Times' output the way you would judge a newspaper — as a comprehensive bundle of everything you need to know about everything — it is the best bundle in the world.

But in a disaggregated digital landscape, tougher questions need to be asked. Is the Times' coverage of the Mets better than Amazin Avenue's? Is the Times' coverage of politics better than Politico? Is the Times' coverage of business better than the FT's? The challenge of producing "the best" digital journalism is considerably more far-reaching than taking the best print journalism and packaging it in a digitally savvy way. The unbundling of content has real implications for what it means to be the best — implications that the report seems somewhat blind to. The Times is best-in-breed in some of the categories it covers, but that's certainly not the case in all of them.

Is the report self-undermining in any hilarious ways?

Yes! For starters, the report has been a huge hit on the internet. But instead of being a huge hit on the New York Times' website, it was a huge hit on Buzzfeed. Imagine a world in which instead of producing a painstakingly designed 91-page print document that was then photocopied and leaked to Buzzfeed, the content was packaged as a digital feature published by the Times itself.

The bottom line

Managing disruptive technological change is really hard. Not only — or even mostly or even partially — because the people in charge don't "get it." As the Innovation Report notes, the Times currently derives 75 percent of its revenue from its print operation. Under the circumstances, shifting to a digital-first mentality is genuinely difficult. The good news for the Times is that in addition to its extraordinarily strong brand and currently profitable business it has an extremely clear-eyed look at the nature of that challenge.

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The New York Times paid ousted editor Jill Abramson a lower salary than the male editors who had previously held her position, the New Yorker reported Thursday evening.

The salary figure follows earlier reports that Abramson lost her post as the Times' executive editor after confronting other executives about earning less than her predecessor, Bill Keller.

In the New Yorker article, Ken Auletta cites the dispute over pay as one factor in "fraught relationship" between Abramson and New York Times publisher Arthur O. Sulzberger, Jr. Auletta included specific salary figures, suggesting that Abramson initially earned $84,000 less than her predecessor, Bill Keller:

As executive editor, Abramson’s starting salary in 2011 was $475,000, compared to Keller’s salary that year, $559,000. Her salary was raised to $503,000, and—only after she protested—was raised again to $525,000. She learned that her salary as managing editor, $398,000, was less than that of a male managing editor for news operations, John Geddes. She also learned that her salary as Washington bureau chief, from 2000 to 2003, was a hundred thousand dollars less than that of her predecessor in that position, Phil Taubman.

A spokeswoman for the Times cautioned Auletta "that one shouldn't look at salary but, rather, at total compensation, which includes, she said, any bonuses, stock grants, and other long-term incentives."

For what its worth, Auletta doesn't seem fully convinced by this explanation:

It is hard to know how to parse this without more numbers from the Times. For instance, did Abramson's compensation pass Keller's because the Times' stock price rose? Because her bonuses came in up years and his in down years? Because she received a lump-sum long-term payment and he didn't?

And, if she was wrong, why would Mark Thompson agree, after her protest, to sweeten her compensation from $503,000 to $525,000?

The Times has previously issued a statement to Politico saying that Abramson's "total compensation" was not less than Keller's, noting that "Her pension benefit, like all Times employees, is based on her years of service and compensation. The pension benefit was frozen in 2009."

See more on Jill Abramson and the New York Times here.

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Of course! According to the New York Times, it's "back-EH".

No one knows exactly why Jill Abramson was fired as editor of the NYT. But one thing is clear: she was fired not long after she started asking questions about the amount that she had been paid, over the course of her career in NYT senior management, compared to the amount that her male predecessor was paid.

Very few people like to talk about how much money they make — especially not people who earn a lot of money. Since companies tend to be run by people who earn a lot of money, the result is a culture of silence and secrecy when it comes to pay. Such a culture clearly served the NYT ill in this case. If the salaries of senior NYT management had not been a closely-guarded secret, then Abramson would not have been shocked when she found out how much Bill Keller made before her, and Arthur Sulzberger would not have reacted badly to Abramson’s questions about pay.

Felix Salmon is a senior editor at Fusion.

Indeed, secrecy surrounding pay is generally a bad idea for any organization. Ben Horowitz has the best explanation of why that is: it can’t help but foment poisonous internal politics. But there are other reasons, too.

For one thing, secrecy about pay is bad for women, who are worse at asking for raises than men are. If men secretly ask for raises and secretly get them, while women don’t, then that helps to explain, at least in part, why men end up earning more than women.

Secrecy around pay is also a great way to allow managers to — consciously or unconsciously — play favorites with their staff. When you’re deciding how much to pay your employees, you want to be as transparent as possible. A not-great way of being transparent is the civil service method: set narrow pay bands for every level of seniority, and then declare that the only way to get a substantial raise is to get a promotion. The problem with this kind of system is that it begets the Peter Principle: everybody gets promoted to a position of incompetence.

Still, there’s quite a lot to be said for a system, like the civil service, in which everybody knows what everybody else is making. It makes conversations around pay much easier, and reduces craziness like this:

He sat down opposite me and then he told me the job was mine. "Do you want it?" Yes, I said, a little startled. The job, he explained, came with a guaranteed salary for three years. After that, I would be on my own: I’d make what I brought in from my patients and would pay my own expenses. So, he went on, how much should we pay you?

After all those years of being told how much I would either pay (about forty thousand dollars a year for medical school) or get paid (about forty thousand dollars a year in residency), I was stumped. "How much do the surgeons usually make?" I asked.

He shook his head. "Look," he said, "you tell me what you think is an appropriate income to start with until you’re on your own, and if it’s reasonable that’s what we’ll pay you." He gave me a few days to think about it.

More generally, a system whereby salaries are set internally, according to the value of the person and the position, is a system which doesn’t find itself constantly buffeted by unpredictable exogenous factors.

We’ve all worked in companies, I’m sure, where the only way to get a substantial raise is to confront management with a job offer from somewhere else. That’s clearly a dreadful way to run a company, since it gives all employees a huge incentive to spend a lot of time looking for work elsewhere, even if they’re very happy where they are.

One of the problems is that virtually everybody in corporate America — from senior management all the way down to entry-level employees — has internalized the primacy of capital over labor. There’s an unspoken assumption that any given person should be paid the minimum amount necessary to prevent that person from leaving. The simplest way to calculate that amount is to simply see what the employee could earn elsewhere, and pay ever so slightly more than that. If a company pays a lot more than the employee could earn elsewhere, then the excess is considered to be wasted, on the grounds that you could get the same employee, performing the same work, for less money.

How is it that most Americans still believe in this way of looking at pay, even as we reach the 100th anniversary of Henry Ford’s efficiency wages? Ford was the first — but by no means the last — businessman to notice that if you pay well above market rates, you get loyal, hard-working employees who rarely leave. Many contemporary companies have followed suit, from Goldman Sachs to Google to Bloomberg: a well-paid workforce is a happy workforce, which can build a truly world-beating company.

Such companies are, sadly, still rare, however. That’s bad for employees — and it’s bad for the economy as a whole. We need wages to go up: they’ve been stagnant, for the bottom 90% of the population, for some 35 years now. We also need employee turnover to go down: employees become more valuable, in general, the longer they stay with a company — and it takes a long time, and a lot of human resources, to train a new employee up to the point at which they really understand how their new employer works.

There are two things I look for, then, in any company. The first is high entry-level wages. They’re a sign that a company values all of its employees highly; that it likes to be able to pick anybody it wants to join its team; and that it considers new employees to be a long-term investment, rather than a short-term source of cheap labor.

The second thing I look for is a system whereby managers regularly earn less money than the people who report to them. You shouldn’t need to get promoted to a position of incompetence just in order to earn more: you should get paid well for doing the job you do best, even if that doesn’t involve managing anybody. The whole "I work for you" rhetoric of touchy-feely CEOs is actually true, or should be true: value is created by talented workers on the front lines, not by middle management, and it’s management’s job to support those workers any way they can, including by paying them as much as possible.

If you have a company with high entry-level wages and where the front-line talent often gets paid better than the managers, then you’re probably in a pretty efficient industry with relatively low turnover. On the other hand, if you have a company with low entry-level wages and where pay invariably rises the higher you go up the org chart, then you probably have a company where managers spend altogether too much time hiring and training people to do jobs they could probably do better themselves.

If you work for a company where everybody knows what everybody else is earning, then it’s going to be very easy to see what’s going on. You’ll see who the stars are, you’ll see what kind of skills and talent the company rewards, and you’ll see whether this is the kind of place where you fit in. You’ll also see whether men get paid more than women, whether managers are generally overpaid, and whether behavior like threatening to quit is rewarded with big raises. What’s more, because management knows that everybody else will see such things, they’ll be much less likely to do the kind of secret deals which are all too common in most companies today.

So let’s bring pay rates out into the open, where they belong. Doing so will create better companies, staffed with better-paid and more productive employees. Which is surely exactly what America needs, in a world where it can never compete by racing to the bottom.

Felix Salmon is a senior editor at Fusion.

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It's worth being skeptical about the details dribbling out of the break between the New York Times and Jill Abramson right now.

A good rule of thumb for this kind of thing is that if the principals aren't talking, then the stories are probably wrong — or at least incomplete — in very important ways. It's almost impossible for a reporter, no matter how good, to deliver a clear description of a negotiation where the people doing the negotiating aren't cooperating. Instead you get a lot of second-hand (or worse) information, some of it from sources who don't know nearly as much as they think they do, some of it dressed-up to sound more authoritative by reporters or pundits who want to seem like they're more in the loop than they are.

"As part of a settlement agreement between her and the paper, neither side would go into detail about her firing," reports the New York Times. Perhaps that's not true. With anonymous sources you never really know who's talking and who isn't. But at this juncture it's probably mostly true. The Sulzbergers are likely trying to ride this out. It sounds like Abramson is legally barred from discussing the break. Friends and allies might step into the breach, but so too will hanger-ons, troublemakers, and earnest observers who think they know a lot more than they do. Moreover, this seems to have been an incredibly well-kept secret in the Times newsroom. The universe of people who know the real story is, for now, quite small — and they're only in the know because one side or the other is sure they won't talk.

Which isn't to say the reporting coming out now is wrong. It's just not quite right, either. There's some truth in it, a lot of truth missing, a few lies mixed in for good measure, and it'll be a long time till we can tell which is which.

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The New York Times' own reporting on the NYT adds a new axis of conflict to the story saying that Dean Baquet, number two under Abramson and now the new boss, was "angered over a decision by Ms. Abramson to try to hire an editor from The Guardian, Janine Gibson, and install her alongside Mr. Baquet in a co-managing editor position without consulting him."

Easy to see why that would anger someone, but it's still not every day that when boss and subordinate disagree about something, the boss gets fired and the subordinate gets to take over.

Bloomberg's Edmund Lee adds a new tidbit: "She had taken to giving interviews and appearing on panels without consulting the company, a move that rankled Sulzberger, according to two people."

Seems a little odd that a top editor couldn't be trusted to make these decisions on her own.

It'll be some time before we know the full story behind Jill Abramson's ouster at the New York Times — if we ever really do. But from what we do know, her whole career at the Times tracks why it sucks to be a woman leader in America today.

Begin at the beginning. Abramson was appointed to her position in 2011 — a horrible time for newspapers. That fits. In a 2005 paperresearchers from the University of Exeter coined the term "glass cliff" to refer to the tendency of poorly performing companies to appoint women leaders during periods of maximum turmoil. The result is women end up taking the helm of companies during periods of hard choices and painful cuts that can make success seem nearly impossible.

Abramson was handed the reins of a New York Times undergoing a wrenching digital transition. "When she was brought on, anyone who was going to be the next editor of the New York Times was going to be taking the New York Times in this brave new era of information," says Rachel Sklar, founder of Change the Ratio and, which promotes women in media. "That's widely seen across the industry as a big challenge."

Outward appearances suggest the Times, under Abramson, managed it well. During her tenure, the Times' business flourished even as other newspapers suffered. The web site, too, has been something of a marvel, generating huge revenue off of its paywall. But the upheaval necessary to stay ahead lent itself to continuous clashes between Abramson and her colleagues.

The reason publisher Arthur Sulzberger, Jr. gave in his announcement about Abramson's firing was "an issue with management in the newsroom." That echoes reports that Abramson's brusque leadership style clashed with leadership and reporters alike (criticisms that are near impossible to read as non-gendered, particularly in the news world, where pushiness is often seen as a virtue in men). In a controversial 2013 piece in Politico, Dylan Byers wrote: "At times, [staffers] say, her attitude toward editors and reporters leaves everyone feeling demoralized; on other occasions, she can seem disengaged or uncaring."

But a look at the examples he gave shows just how gendered these discussions can get. In one instance, Abramson reportedly ordered an editor to leave a meeting to change a stale photo on the newspaper's homepage. That was played in the article as proof of Abramson's brusque, demoralizing style. But compare that to this anecdote about how Tim Cook, head of Apple, dealt with a manufacturing problem in China:

"This is really bad," Cook told the group. "Someone should be in China driving this." Thirty minutes into that meeting Cook looked at Sabih Khan, a key operations executive, and abruptly asked, without a trace of emotion, "Why are you still here?"

Khan, who remains one of Cook's top lieutenants to this day, immediately stood up, drove to San Francisco International Airport, and, without a change of clothes, booked a flight to China with no return date, according to people familiar with the episode. The story is vintage Cook: demanding and unemotional.

Changing a photo on a homepage is a lot less taxing than dropping everything to fly to China.

Meanwhile, Abramson's successor as executive editor, Dean Baquet, is depicted in the article as throwing a temper tantrum after one meeting with Abramson. Upon leaving her office he "slammed his hand against a wall and stormed out of the newsroom," Byers writes. "He would be gone for the rest of the day."

Baquet acknowledges that he was often caricatured as calmer than a "bitchy" Abramson — a caricature he disagrees with. It's hard to imagine what the caricature would look like if it had been Abramson who had punched a wall in full view of the staff and then gone home.

Of course, these anecdotes are only small windows into life at the Times, and it's possible that Abramson was truly terrible as a boss. That said, if the most damning anecdotes there are about Abramson's management style concerned her snapping at underlings, it does raise the question of exactly why she was perceived as so difficult, and if a man would have been seen similarly.

During this period, Abramson found she was being paid substantially less than her (male) predecessor, Bill Keller. Ken Auletta reports that she went as far as having a lawyer speak to Times executives on her behalf. The Times, meanwhile, claims that Abramson's compensation was "directly comparable" to Keller's, though a lot can be hiding in the nuances of the language here.

What we can say with certainty is that there was clearly a confrontation over her pay. And though we may never know whether it led in any way to her dismissal, this bit of the story also echoes one of the key issues in the gender wage gap discussion today: pay transparency. Equal pay advocates argue that workers should be able to ask about pay policies without fear of retaliation, and that this could help close the pay gap.

The story will of course be untangled and scrutinized ad nauseum over the coming days. But at first blush Abramson's tenure is a perfect storm of everything ugly about becoming a woman boss, from the wage gap to the glass cliff to the gender stereotypes that afflict female leaders.

Update. This story was updated to include that Sklar is also the founder of

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NPR's media reporter David Folkenflik tweeted out a fascinating series of observations about Jill Abramson and the New York Times early Wednesday evening. Media news junkies should be following him every day, but if you happen to miss these tweets it's worth taking a moment to read the whole series. He paints a portrait of a multi-dimensional conflict between Abramson and her bosses with a dose of gender pay gap, a dollop of digital transition, and range of other issues coming into play:

Read more:

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The New York Times has dismissed Jill Abramson from her position as executive editor, a job she took in 2011, and replaced her with managing editor Dean Baquet. The reasons for her removal are not yet clear; publisher Arthur Sulzberger cited only "an issue with management in the newsroom." And the decision is surprising, given that the New York Times has thrived as a business under Abramson's tenure.

What we do know for sure about Abramson is that she had a well-earned reputation for being, there is no better way to put this, a total badass. She has four tattoos, including, on her back, the T in the New York Times logo. She was hit by a truck, which ran her over after striking her, and turned the experience into a long-form piece about pedestrian injuries.

Abramson also, in 1991, was one of the lead reporters nationwide on law professor Anita Hill's accusations of sexual harassment against Supreme Court nominee Clarence Thomas. Abramson, then of the Wall Street Journal, was so crucial to the Hill controversy, which almost derailed Thomas's nomination, that she co-wrote a book about it along with fellow Journal reporter Jane Mayer.

That wasn't Abramson and Mayer's only adventure. During the investigation, while they were shaping the course of Thomas's nomination, the pair also broke into Mayer's ex-boyfriend's house to steal back a puppy that he'd taken from Mayer. Yes, really. Here's the anecdote, from Abramson's book, "The Puppy Diaries" (hat tip to Chris Heller):

Over the years, Jane and I had enjoyed many capers, both professional and personal. We had cowritten a best-selling book about Supreme Court justice Clarence Thomas, a project that involved some of the most challenging reporting of our careers. This undertaking did have its lighter moments, however; in one instance, our investigation required that we watch X-rated videos featuring a porn star named Bad Mama Jama, and they were so ridiculous and boring that we both fell asleep on my living room couch.

A couple of years earlier, we had rescued Jane's lovable yellow Lab, Peaches, from the clutches of a very bad boyfriend who had insisted on keeping Peaches after he and Jane split up. One hot Friday, as I was planning a drive to New England for a summer vacation with the kids and Buddy, Jane enlisted my help in a plot to kidnap Peaches. That afternoon, while the boyfriend was still at work, we pulled up to his house in my creaky green minivan. Jane was so tiny that she had no trouble sneaking into the house through the dog door. In a flash, she emerged through the front door with Peaches, who clambered into the minivan next to Buddy as I stepped on the gas and we sped away.

As a bonus, here's Abramson hitching a ride in the back of a pick-up truck at this year's South By Southwest:

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New York Times executive editor Jill Abramson, the first woman to hold the top spot at the nation's most important newspaper, is stepping down today. As the Times put it, "the reasons for the switch were not immediately clear."

You often see companies change management amidst business crises. But one thing that is clear is that amidst a generalized crisis for the American newspaper industry the Times is doing quite well as a business. In the first quarter of the year, the Times scored a $22 million operating profit on $390 million in revenue. That revenue figure represented a 2.6 percent increase from the year-ago quarter, including a 3.4 percent increase in ad revenue.

The overall newspaper industry, meanwhile, is a disaster area.

Newspaper The Times' operating profit was down in 2014 Q1 relative to 2013 Q1, but the company attributes that to "strategic growth initiatives." Whether those will pay off or not is anyone's guess, but the basic picture is of a healthy company. Its revenues exceed its operating costs and its revenues are growing. The company makes enough money that it doesn't need to choose between profits and strategic investments. And it's paid off in the share price:


None of that proves Abramson was doing a great job as executive editor, of course. But it does make this change in leadership different from the vast majority of newspaper turnovers that we've seen in the past 10 years — the outgoing editor has been working at the core of a growing and successful business, not a declining one.

Read more on what a badass Jill Abramson is.

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