The Dotcom Brain Drain   

Print journalists are heeding the siren song of the Internet.

LIKE EVERY would-be entrepreneur, Nick Denton had an idea that kept him up late at night. Finally, tired of the usual 9-to-5, Denton quit his job two years ago and followed the herds into cyberspace. At 33, he's not looking back. "I only wish I had done this sooner, says Denton, an affable Brit. Of course he does. By the time you read this, Denton expects to have sold another chunk of his San Francisco-based company, Moreover.com, to venture capitalists. Projected selling price: somewhere between $10 million and $20 million.
It's become a recurring theme in the Internet age: Disaffected worker bee gets fed up with The System. Sees gold in online venture. Starts online venture. Strikes gold. It's the story of Amazon.com, Yahoo!, America Online, eBay and just about everything else dotcom. But here's the twist: Journalists are getting in on the act, too. Denton, a former reporter for the Financial Times of London, is one of thousands of journalists who've left traditional newsrooms in recent years for the Web. Moreover.com is, in fact, a kind of newsroom of newsrooms, linking users to hundreds of online news sources and thousands of articles.
But while journalists may find some vicarious satisfaction in Denton's success, newsroom managers probably just get headaches. Every story like Denton's means another slot to fill, another recruiting hassle, another body down. A roaring, zero-unemployment economy has made it tough enough to recruit talented people to traditional journalism jobs; the steady brain drain to the Internet is making it harder still. "It's a war out there" to find and hire good journalists, says Max Heath, executive editor of Landmark Community Newspapers, a 48-paper chain. "It used to be a skirmish. Now it's full-out war every single day."
An exact census of the number of journalists who've migrated to online jobs is hard to find (and would be quickly out of date, anyway). From virtually nothing four years ago, online journalism has exploded. Last year was easily the busiest. Financial news sites such as TheStreet.com, CBS Marketwatch.com, C/Net, Wired News and Red Herring assembled news staffs that rival mid-size newspapers, both in number of journalists and in quality. Big-name journalists like CNN's Lou Dobbs and Sydney Schanberg, formerly of the New York Times and New York Newsday, joined nascent Internet companies.
News and journalism are everywhere on the Web. Even "portal" sites (Yahoo!, AOL, MSN, etc.) and e-commerce outfits (eToys.com, Amazon.com, etc.) have exclusive "content" (otherwise known as news and information) that is reported, edited and packaged by journalists and quasi-journalists. "Web sites are basically about conveying information in engaging ways," says Denton. "That's what journalists do."
But if everyone's going online, who's left in the oldline world? Newspapers aren't exactly running out of reporters and editors, but there are some noticeable holes developing. Positions that used to get filled quickly at newspapers now remain open for months as managers comb the same shrinking pool.
Last year, the San Jose Mercury News, located in ground zero of Silicon Valley, lost 11 reporters and editors to dotcoms. The defectors included Jonathan Krim, an assistant managing editor, who became executive editor of TheStreet. com. Also leaving were veteran reporter Jonathan Rabinovitz and young star Miguel Helft, both of whom went to the Industry Standard, which covers the Internet economy online and in print.
"We're uniquely positioned, but I don't think we're unique," says David Yarnold, the Merc's executive editor. "I'm hearing stories from everywhere about people leaving for online positions. We're not any different than the others."
Up the interstate in San Francisco, Chronicle Executive Editor Matthew Wilson reports that 11 of his staffers also walked out the door and into Internet ventures last year. Wilson, whose paper is facing a takeover by the owners of the afternoon Examiner, tries to put the best face on the exodus: "If you have people in your organization who move on to greater opportunity, it means you're hiring and producing people with talent."
High-ranking Examiner alums have become dotcom entrepreneurs; Marketwatch and Salon, both of which have had lucrative public share offerings, were started by former Examiner editors. Even the paper's publisher, William Randolph Hearst III, got bitten by the bug a few years ago, leaving his position to join the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.
Seattle's two dailies, the Times and the Post-Intelligencer, keep a wary eye on such neighbors as MSN.com, MSNBC.com and Amazon.com, which have periodically raided the papers' newsrooms. "It's enough to be a thorn in our side," acknowledges Alex MacLeod, the Times' managing editor. "People who work at a newspaper with as solid a reputation as this one are natural targets."
MacLeod knows that's small consolation, given the hassles of finding competent replacements. Newsroom recruiting is an expensive and time-consuming proposition, says Judith Havemann, who recruits for the Washington Post, one of several large papers that maintain full-time recruiting staffs. For every reporter they lose, recruiters such as Havemann have to wade through dozens of resumes, check out references, network with colleagues. Promising candidates then have to be flown in for several interviews, put up in hotels, taken to lunch and dinner. Some papers do background checks and drug tests. There are moving costs and, occasionally, signing bonuses.
It's a costly undertaking, both in monetary terms and in the distraction from the actual job of putting out the paper each day. Some news organizations use professional headhunters, who typically charge up to 35 percent of a candidate's annual salary, according to Susan Roberts, executive director of the International Association of Corporate and Professional Recruitment. Others have had to get more serious about doing the job themselves. The Mercury News' Yarnold recently created a half-time recruiting position just for his financial news staff, which has been hardest hit by the dotcom raids.

OF COURSE, with demand for good journalists outstripping the supply, editors and reporters now have more flexibility than ever to put a price on their loyalty. Newspaper salaries are going up, both as a result of general economic conditions and because of labor competition from the Internet, editors say. By how much? It still depends on who you are and where you are, but a survey by the University of Georgia found that first-year professional journalists, both online and off, earned an average of $24,000 in 1998. That was an increase of 4.3 percent for the year, and nearly 10 percent over two years.
"A lot of papers benefited from being monopolies, which kept salaries low and competition for talent weak," says Dave Kansas, a former Wall Street Journal reporter who's now editor of TheStreet.com. "Now we see an explosion of competition for talent. A lot of papers have had to readjust the way they compete."
Adds Landmark's Heath; "As an industry, we haven't been paying enough at the entry level to attract the best and the brightest. That's just the dirty truth. Let's be honest about it."
Even as the average wage rises, however, it masks some wide disparities, both in actual compensation and in working conditions, between the online and oldline worlds. Students with strong journalism and technical skills can command as much as twice what their print brethren will make in first-year jobs, estimates Larry Pryor, executive editor of Online Journalism Review and a professor at the Annenberg School for Communication at the University of Southern California.
It's more than just money that makes a difference, too, he says. "Students look at entry-level positions in print journalism as a grind, a sweatshop," says Pryor. "They see a world run by older editors who want to yank them around. It's not that print journalism is technologically backward. It's just not a very happy circumstance. They've heard too many war stories from people who've graduated ahead of them."
Drew Weaver would have been happy to stay in newspapers. But when a two-year reporting contract with the Philadelphia Inquirer ran out in 1997, Weaver began casting about. The Internet--specifically, America Online's fledgling Digital City service--scooped him up. "I felt uneasy about it at first," says Weaver. "I had invested a lot of time being a newspaperman. But then the world changed on me."
Weaver isn't likely to be back in a suburban bureau anytime soon. With Digital City, he first moved to San Diego, where he supervised three feature writers. Within a year, he moved to Los Angeles, where he was named news editor, supervising coverage in three cities. Last summer, he moved to Digital City's headquarters in suburban Washington, D.C., where he was put in charge of planning entertainment guides for 200 cities.
Weaver is 29.
"I had planned to job hop," he says, "so that's the way I learned to move up quickly in the newspaper business--a year or two in each place.... But the energy I get from this job can't be replaced. That's why I've stayed. I imagine I could try newspapers again if this whole Internet thing fails. But I seriously doubt that."
Multiply Weaver's tale by a few thousand young people and the long-term consequences start to look serious for newspapers, USC's Pryor believes. "I'm afraid that the bottom of the [newspaper] food chain is getting wiped out. [Smaller papers] can't find good candidates anymore. They think they have to compete on salaries to be competitive. This isn't just a salary issue, though."
Indeed, for newspaper managers, raising salaries alone probably won't cut it. Online enterprises have some distinct attractions, especially to the young. For one, they tend to be clustered in big, exciting cities (think New York, San Francisco and Seattle), which eliminates the need to start one's career at a small daily somewhere Out There. The bosses tend to be young themselves, the work less tradition-bound. The Internet has given journalists "a chance to be at the center of something pioneering," says Kansas. "They haven't had that chance since TV came along a generation ago. We have the opportunity to define how an entire new medium will look."
That, and to make a lot of money, too.
Few newspapers, if any, offer stock options to attract journalists. Internet companies do. Options carry risk, but they also carry something most vow-of-poverty journalists have never been able to imagine: the chance to become exceedingly rich.
Mike Mills, a former telecommunications reporter for the Washington Post, knows about that firsthand. He left the newspaper last April to start a new career as a business-development executive for a tiny wireless communications company called Aether Systems, headquartered in Owings Mills, Maryland. A few months after his arrival, Mills helped take Aether's stock public. The shares tripled in price in their first day of trading, and have kept on rising since. Mills isn't rich yet--he notes that his options are still merely "vapor" since he won't be fully vested for three years--but it's hard to knock his timing.
Other journalists have cashed in, too. Although shares of TheStreet.com, Marketwatch.com and Salon.com have plunged from their high points, the founding journalists of these three sites--James Cramer, Larry Kramer and David Talbot, respectively--have profited handsomely, as have some of their employees.
Not all Internet start-ups get into the tall green--in fact, most don't--but if there's a lesson here, it's that newspaper journalists believe the Internet gold-rush stories they've been writing. "Let's not make any bones about this," says Yarnold of the Mercury News. "The people who are leaving are not leaving for a higher calling."
Says MacLeod of the Seattle Times: "When you live in an area where there are five- or six-thousand millionaires under the age of 40, and you're a young journalist working for a newspaper, it's going to have an effect on you. When you're running into wealthy people, hearing about [fortunes being made], over time it causes some people to feel like fools if they're not somehow chasing it. [Newspapers] just don't have access to a pot of gold."

SOME NEWS organizations are taking steps to stem the flow. Knight Ridder, for one, spun off its online businesses as a separate company. And there's talk of taking it public. Part of the idea is to cash in on Wall Street's mania for Internet stocks, but part is to create a currency, in the form of stock options in the new company, to keep and attract hot talent, says Steve Outing, the online columnist for Editor & Publisher. A similar plan is in the works at the New York Times.
Other editors suggest that in the absence of greater financial rewards, journalists can be kept happy with more control over their work and less deadline pressure. In Shelbyville, Kentucky, where Heath runs the Landmark chain of newspapers, new hires are getting more responsibility than ever. A new college graduate, with no professional experience, was recently handed editorial control of one of the chain's weeklies.
Heath figures he's got no choice; Landmark's community newspaper division had 15 openings at the end of 1999. The pipeline is so constricted that the community paper division sometimes finds itself fighting over job applicants with its daily papers. "There are only two kinds of recruiters nowadays--the quick and the dead," says Heath.
MacLeod, at the Seattle Times, says the answer to keeping and attracting people is to "run a good newspaper. Treat people well. Support people's goals and help them achieve them."
"Can we compete?" asks the Chronicle's Wilson rhetorically. "Yeah, but the real question is: Do we compete in the same way? We have to compete by being attractive places to work, good, fun places to work. Find ways to advance people. Find good fits for them."
And one more thing: It doesn't hurt to slag the competition.
Says Wilson, "The whole dotcom and IPO rush is somewhat of an aberration in the long sweep of history that will never repeat itself. It's a frenzy that's going to end. You can make money... but you have to ask yourself whether you'll be happy doing it." Wilson says he's heard expressions of dissatisfaction from journalists who've gone to Web sites; one Chronicle editor, after a week at the paper's online version, asked to return to print, Wilson says.
The Seattle Times' MacLeod sniffs: "Most of the work you do when you go to an Internet company is not journalism. It's the information business, or the e-commerce business, or working for glorified tip sheets. Some of our people have gone to MSNBC and turned around two or three months later because they found themselves in an environment where there was no discussion of journalism. I'm not making that judgment myself, because I've never been in MSNBC's newsroom, but that's what they said."
Merrill Brown, MSNBC.com's editor in chief, replies that MacLeod is wrong on the facts--he doesn't recall losing staffers to the Times--and in his tone. "The people who've come over to us did so because they wanted to leave the small-town press and do something significant on the national scene," he shoots back. "There remains a certain ignorance in the journalism community and the world at large about what we do here and what journalists do on the Web. But these things take time, especially at sleepy places like the Seattle Times."
In fact, E&P's Outing recognizes that "the lure of entrepreneurship is pretty strong," and that the Internet is likely to keep bleeding newspapers of their talent for years. He knows whereof he speaks, too. Outing isn't quitting his day job, but he, too, has started his own company, which links writers and editors via a help-wanted forum.
It's on the Internet, of course.