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WITH MALCOLM NETBURNDeliberately Disruptive:Lessons from Atlantic Media Company’s Digital Direction Malcolm Netburn Chairman and CEO of CDS Global

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FORWARD: with Malcolm Netburn December 2012Deliberately Disruptive:Lessons from Atlantic Media Company’s Digital DirectionPublishers who survived the print and advertising crises of 2008 continue to struggle in theirattempts to crack the digital success code. These publishers are increasingly turning to the definingtenets of technology startups for suggestions on how to re-create themselves for the digital age.A leading example is the daring stance taken by the Atlantic Media Company, which sought tobreak the new media mold when it launched its mobile-centered startup, Quartz, in September 2012.The publisher of the 153-year-old print magazine The Atlantic set out to embody a “disruptive,open-minded and bold” approach to how the public consumes its business news.In 2010, long before any inklings of Quartz had begun to surface, the Atlantic Media Companydeconstructed its legacy business, blowing apart even the most fundamental fibers of its model.“We imagined ourselves as a venture-capital-backed start-up in Silicon Valley whose mission was toattack and disrupt The Atlantic,” said Justin B. Smith, president of the Atlantic Media Company,in an interview with The New York Times in December 2010.“In essence, we brainstormed the question, ‘What would we In 2010, long beforedo if the goal was to aggressively cannibalize ourselves?’” any inklings ofIn a keynote delivered at the Alliance for Audited Media’s (formerly Quartz had begun toABC) annual conference in November 2012, Smith openly shared critical surface, the Atlanticfactors driving his business’s digital success strategy, advising industry Media Companypeers to heed 10 game-changing developments that have emerged asa result of the social-mobile landscape. Below are Smith’s 10 imperative deconstructed its legacyfactors accompanied by my own brief commentaries: business, blowing apart even the most10 Critical Opportunities Determining Digital Success fundamental fibers of1. New media is a high-growth landscape that demands companies its model. act – fast. Veteran media companies must embrace digital media’s disruption as a fresh, high-growth opportunity. Diligently focus on this silver lining and pay extremely close attention to emerging market forecasts in order to leverage previously nonexistent opportunities. Take a lesson from startups and fail often, quickly and cheaply. Media companies – especially large, industry-leading incumbents – who wait for safe, predictable circumstances in order to deploy painstaking iterations, do so at their own peril.2. The future of media is unclear for everyone, therefore instinct, not previous methods for measurement, must lead the charge. According to Smith, the media industry is wading through a “fog soup” of sorts. The future is hazy and filled with unknown unknowns – and just how to transition remains unclear. Take a lesson from renowned technologist Andrew Grove, who stresses that “business instincts and personal judgment are all that can be relied on” in times such as these, where what used to work for the company no longer can.© 2012 CDS Global. All rights reserved. 2

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FORWARD: with Malcolm Netburn December 20123. The impending explosion of mobile devices will drive strong demand for mobile-rich content. Although the new media landscape is rife with unknown knowns and unknown unknowns, media must take advantage of one of digital’s most reliable, transformative known knowns: the widespread proliferation of mobile devices, including smartphones and tablets. The implied impact on media consumption is enormous. KCPB’s Mary Meeker, one of the foremost leading experts on mobile forecasts, predicts that by the end of 2013 there will be 2.4 times as many mobile devices as PCs. Cisco predicts that between 2011 and 2016 mobile cloud traffic will grow 28-fold, showing a compound annual growth rate of 95 percent. Statistics and research reports demonstrating mobile’s expected growth are unending. The possibilities for media companies seeking to leverage this growth may be as well.4. Media must tap the growing demand for widespread, unlimited access to content. The proliferation of mobile devices and the growing adoption of cloud computing is nurturing a strong demand for unlimited, seamless access to content, driving the production of sophisticated converged entertainment systems. Cloud and streaming content such as gaming, movies, Internet browsing, photos, music and more are now being sent from mobile phones to the living room big screen through software applications such as Xbox SmartGlass and Apple AirPlay, and facilitated through the use of a single home hardware device like Xbox 360 and Apple TV.5. As content increasingly narrows, media must focus on niche. The proliferation of digital devices, the variety of content platforms and the continued free- flow, democratization of information is producing an increasingly fragmented atmosphere. Consumers are empowered to find highly specific content that caters to their exact needs how, where and when they want it. Smith calls this “nichification.” Media companies who identify and exploit their strongest niches have the opportunity to pursue a more captive, loyal audience than media companies who continue to produce content for broad, general consumption.6. Exploit the unbundling of content. According to Smith, the bundled experience is becoming archaic. In print, each magazine issue is compiled of multiple content pieces that produce a physical beginning and end, innately defined by the issue’s publication date (“the September issue,” for example). Most print magazines have transferred this traditional model onto their digital counterparts, but this is not at all necessary in the digital realm. Similar to individual songs being digitally purchased as opposed to whole albums, it’s an individual article that is most often being digitally consumed (and shared), not whole issues. Quartz’s decision to adopt its continuous scroll format, where stories stream in an uninterrupted, lateral fashion, was a direct response to how digital content is intrinsically consumed.7. Feed the new consumer’s insatiable appetite for socially optimized, real-time content. The social Web is predominantly mobile, meaning today’s consumers are always connected – to the Web at large and to their unique, personalized social spheres. From inception, content must now be produced with shareability and real-time access in mind in order to engage with the new consumer. Unbundled media produced for the real-time, social landscape has the potential to become what Smith calls “the unfinishable, infinite scroll.”© 2012 CDS Global. All rights reserved. 3

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FORWARD: with Malcolm Netburn December 20128. Increased influence of social networks on consumer buying behavior. Social sites, both on the Web and in the form of mobile apps, are generating increased consumer-based traffic. Users are being incented to share discounts with peers, rate purchase experiences and seek peer community advice before making purchase decisions. As consumers increasingly seek product knowledge firstly through their direct social spheres before searching via the Internet, browsers such as Google face growing competition from consumer-focused social sites such as Yelp, LivingSocial and Foursquare, as well as broader, leading social networks like Facebook.9. As digital competition mounts, exceptional user experience (UX) must become a priority. The debate between whether content remains king in the digital era continues to wage on. Some experts stress that, when it comes to digital, experience is king. As technologies become commoditized, Smith stresses that the design becomes the differentiator. Competition in the digital content space is fierce. Web and mobile designs that fail to demonstrate a best-of-breed understanding of human factors and interactions will quickly alienate consumers, sending them off in search of a better experience, perhaps even despite the quality of content.10. Be mindful of the importance global connectivity plays in digital media. Smith calls the Web a “boundaryless environment.” While businesses continue to demonstrate the value of thinking global and acting local, product strategies must take the growing global mindset into consideration when designing everything from content to user experience. Quartz’s target audience is travelling business executives that place high value on keeping abreast of global economic news. Not just for American jet set execs, Quartz has made its foreign audience a strategic focus.© 2012 CDS Global. All rights reserved. 4