After a six-year hiatus from The Wall Street Journal, Raju Narisetti returned to the paper earlier this year to head its online news efforts. From 1994 to 2006, Narisetti worked for the WSJ in the U.S. and abroad, serving as deputy managing editor and editor of the paper’s Europe edition. He was also founding editor of the India-based business publication Mint.

Narisetti took on the new role at the WSJ after a three-year stint as a managing editor at The Washington Post, developing the digital content strategy for the paper’s website and overseeing its mobile and tablet initiatives. In this interview with Knowledge at Wharton conducted while he was still at the Post, Narisetti discussed why the interplay of technology and content is becoming more critical than ever before. While the values remain the same in both online and print, he notes that there are still a lot of unanswered questions facing the media industry.

An edited version of the transcript follows.

Knowledge at Wharton: So how was 2011 for Washington Post on the digital front? What were your most impressive successes?

Raju Narisetti: It was a great year. We are likely to break a 16-year record in terms of audience measurements — pages read, the number of visitors to the site, the number of repeat visitors and even time spent. And all this in a year in which we’ve had significant change. We completely changed our publishing system, both in print and online. I compare that to changing an engine of a plane that continues to fly. We had a lot of technological issues as well while we were doing it. So in that sense it’s been a great year.

We’ve never had a larger audience for the Post‘s journalism in 134 years. So it feels good on that front. The economy continued to impact us fairly severely in terms of overall revenue. So from that point of view it hasn’t been a great year.

Knowledge at Wharton: What were your most instructive failures?

Narisetti: My sense is that the future of our business and of big media brands is going to play out at the intersection of technology and content to create amazing experiences for readers. While we are focused on our content and our journalism, most big media companies didn’t really pay much attention to technology. And I think that’s coming to bite us a little bit. We have to have an integrated CIO-newsroom approach. And that has been a bit of a stumbling block and a challenge for us at the Post this year.

Knowledge at Wharton: Let’s talk a little bit more about what exactly you mean by the CIO-journalism approach, and if you could put that in the context of the Post ‘s online strategy? How has it evolved to what it has become today?

Narisetti: The online strategy is not really different from our offline or print strategy. The basic approach has been that the Washington Post will be for and about Washington. By that we mean covering Washington for those who live in this area, which is primarily what our print product does, and covering Washington for people anywhere in the world who are interested in Washington and interested in the U.S. [We aim] to be the pre-eminent source of that information. From that point of view, the platform hasn’t dictated the strategy, the strategy and how we implement it across platforms has been the main focus.

The reason why I think that the interplay of technology and content is becoming more and more critical is because in the New York Times, the Washington Post, WSJ, Financial Times, US Today, 70% to 80% of what we write and what we cover is fairly common. In the newspaper world we had a geographically captive audience. In some sense, they did not have much of a choice if they lived in Washington but to read the Washington Post in print. But when it comes to digital, there is immense portability of your reader. And they have become more promiscuous in where they can go and what they can sample. So the only way you’re going to be competitive, the only way you’re going to build engagement and loyalty, is if you take your great journalism and create an amazing experience around it. By that I mean give readers a much more visual experience, whether it’s video or galleries or audio, or the ability to engage with your content, co-create content, or use the databases more effectively. None of this could be done in print. That whole experience is what will bring them back to you versus going to another site. And I think that requires journalism to be hand in glove with technology. That hasn’t been the case all these years in most media houses.

Knowledge at Wharton: Let’s talk a little bit more about the interplay between content and technology. If you look at the web, it has itself transformed from what it was 10 or 15 years ago. In the past, internet publishing was a lot about pushing content at your reader, but with web 2.0 it’s become much more a conversation with your audience. What implication does this have for the way in which the Washington Post manages its content?

Narisetti: There are both good and bad implications. Most newspapers — the Post was a pioneering website — basically took the print edition and put it up on the web. In some aspects that hasn’t really changed. For example, most newspapers still have this idea that they’ll have one front door, the home page, and once you come in they will give you a lot of other options. But I think a lot of niche sites, for example Politico in politics, have really gained ground by not having this single home page approach. So that has changed. At the Post you now have multiple home pages. There is still a main front door, but you have a Post politics, you have a Post opinions, you have a Post sports, you have a Post local. So if those are your prism, you can actually live there very comfortably. You can come in through that door and not have to worry about the Washington Post home page. So that’s been a big change.

The other area is that it’s become much more of a two-way communication as opposed to treating readers like we would treat them in print, which is to tell them: “Here are the five most important stories. That’s why we’re putting them on the front page.” The ability to co-create content, to engage readers, create responses that are interesting and intelligent, and allow other people to think create a little bit of a conversation. So it’s moved from disseminating to having a conversation. And the web and mobile technologies have really allowed us to do that.

Knowledge at Wharton: That’s very interesting. While I was waiting for you downstairs I saw Eugene Meyer’s famous seven principles of what makes a great newspaper. The very first principle is you tell the truth. It’s a timeless principle for publications anywhere in the world. When you are co-creating content with users, or you talk about this whole field of user-generated content, how do you strike the balance between maintaining your editorial quality and sticking to the truth and engaging your reader at the same time?

Narisetti: I think that’s a very critical point that’s often overlooked. Part of it has been the failure of our industry to convince our audiences that the training, the values and the ethics that go into mainstream journalism cannot automatically be replicated by anybody with a camera phone or the ability to tweet and generate content.

You don’t hear of crowd-sourcing law. You don’t hear about crowd-sourcing brain surgery. Admittedly, journalism isn’t brain surgery, but it has certain standards. So I think we have blurred the distinction between quality, ethical, honest journalism and something that anybody can do. As a result I think we have caused a problem that we need to address. Part of it you do with clear labeling. That’s one of the most important things you can do — label. “This is Post-generated content versus this is user-generated content.” Use some technology, for example comments is an area where you can use filters and other ways to maintain a level of discourse that is befitting of your brand. Ultimately you have to stand for something. The Washington Post has certain ethics and values; it has a published code of conduct. In search of eyeballs, we shouldn’t give that up, because if you lose that then you have nothing to fall back on.

We get into trouble because technology overtakes our ability to keep up our standards. We’ve had issues with Twitter. We’ve had issues with personal Facebook accounts. We have to be flexible but we have to deal with that. Ultimately you have to hold onto not just Eugene Meyer’s principles, but your core journalistic values.

Knowledge at Wharton: Can you give any examples of how you have managed to balance being scrupulous in your pursuit of editorial quality and engaging user-generated content?

Narisetti: Lots of examples. Last year we did a series of investigative stories under Top Secret America, which was a two-year effort to look at all the top secret infrastructure that the U.S. has built up post 9/11. In the old world we would just do a couple of stories and we would tell readers this is what we found. But in the new world we put all of our database up on the website and we told readers that here is how you can find what’s happening in your own [area]. Put in a zip code, and you can find out. We encouraged our readers to tell us in a blog post if they found anything interesting, and we said we’ll follow up some of the leads. Getting readers to constructively tell us where new stories might lie is a great use of user-generated content.

Where we’ve also done interesting work is in very small civic things. For example, allowing readers to point out issues with potholes on their streets and using the Post as a conduit to then get that information to civic authorities. A more fun way is to get them to contribute photographs when there’s a big snowstorm. That has value for other readers as well.

Knowledge at Wharton: As you get into things like search engine optimization, doing deals that will drive traffic, has that blurred at the Washington Post the church and state boundary between editorial and marketing?

Narisetti: It actually hasn’t for a very simple reason. In print we had a department called circulation marketing that was responsible for creating marketing campaigns and bringing more readers. In digital, there is no circulation marketing department beyond the newsroom. So we have staffers who help us tweet and who help us make our stories go viral. But I think getting more readers to read your story should be part of your journalistic mission. I don’t see any kind of conflict of interest in doing things that will get more people to read your stories.

Knowledge at Wharton: I’d love to understand how you’re using social media as part of your distribution strategy, specifically can you give examples of how you use Facebook, Twitter, LinkedIn to extend your audience?

Narisetti: Over the past couple of years we’ve actually created a search and engagement team within the newsroom. These are people who are journalists who work in the newsroom, report to me, but who are specialists in these areas. And their mission is twofold. One is train reporters to use Twitter and Facebook and other things better. And then to kind of create new opportunities.

We use [social media] like everybody else does. We have our Facebook pages, we have Twitter accounts by section and by topic. But we’re also using them to create more journalism. We often do call outs, we have done a Twitter video chat which is an interesting way to marry two different platforms. We’ve embraced Facebook in a big way because my view is that when there are 900 million people on a platform, you can’t expect them to come to you, we have to go there. We were pioneers in what’s called the social leader, where we create an app that lives in Facebook, provides all our content in Facebook. [This was] an early experiment. [We said] if this is going to be the future of how news is consumed, let’s play with it on the inside and not make some of the same mistakes we made 10-12 years ago when we started giving away our content for free on the web.

Knowledge at Wharton: How has social media and online media changed the most important metrics that you use to track your performances in these organizations?

Narisetti: What has changed is our ability to measure things in the digital world, which was a lot harder to do in the analog world. The Post has always relied on market research and reader surveys and focus groups. But there was a significant lag between what people read in the paper and what they told us later. In digital, you can measure it in real time. So one of our biggest achievements in the past two years has been to move to a reader-focus-metrics based newsroom where we track probably about 46 different measures every day. We put out dozens of reports; we share a lot of data. They [are] simple things like how many pages have been read of a particular story? How much time has been spent on a story? How many of those stories have been shared? Where has the audience come from? Those are basic measures. Social brings its own metrics in terms of shares and in terms of virality. This can also be tracked.

It has and it hasn’t changed our journalism. It has changed it in the sense that at a time when we are facing significant economic pressures as an industry, it has given us an extra level of information to base our research allocation issues. So, for instance, if I could hire one reporter, based on this data I can tell you that our gap is in covering education. We can put the resource there as opposed to, say, covering crime.

We’ve used data to allocate resources. We have not used it to alter our journalism. I’ll give you a very simple example. Halloween last year, we got about brainstorming and we said we should do something interesting. And somebody came up with an idea that political costumes that people wear. It’s a perfect fit with the Washington Post. By comparison the Huffington Post did Victoria Secret’s Halloween lingerie gallery. You can imagine how many people saw that versus how many people saw our gallery. If I were just going by paid views and eyeballs, I would tell my team that next year we should do this, right? But that wouldn’t be the Washington Post. That wouldn’t be our brand and that wouldn’t be why people come to us. So data is great to understand but it’s not what is driving our journalistic decisions.

Knowledge at Wharton: Is your distribution strategy to maximize the total volume of visitors? Or is it to target specific, high-quality audiences? What are some of the things you’re doing in this respect?

Narisetti: The Washington Post has been a registration-based site all along; you had to tell us a little bit of who you are. We have significant data on our audience. And the reason why we are financially very successful on the web is because we can monetize this audience. From an advertising point of view, we can provide a lot of information on what our audience is. At the same time, it’s also a game of scale. Most advertisers, especially in a tough economic environment, reduce the number of sites they consider, which is called the consideration set. If you want to be in that consideration set, you need to be in the top three, top five. At the same time I’m also very, very focused on the quality of our audience because that is what drives engagement, that’s what drives our ability to charge a lot for our website. So it’s a twofold approach rather than just one or the other.

Knowledge at Wharton: What are the main privacy concerns you have encountered, especially as you move into social media? How are you dealing with them?

Narisetti: The biggest concern always centers around Facebook. There are a significant number of people, especially newspaper readers who tend to be older, who have a lot more questions about privacy. We don’t find that an issue with a lot of the younger readers. We’ve tried to address it by providing a lot of Q&As and having chats, and explaining.

Knowledge at Wharton: Could it be just that the young audience is not aware of the seriousness of some of the issues?

Narisetti: It could be. It could also be that the younger audience is much more comfortable with the idea that, based on their usage and preferences, they will be served up relevant ads. They actually think that’s a good thing.

Knowledge at Wharton: What is your mobile strategy for the content of the Washington Post and what are the most important lessons you have learned?

Narisetti: Multiple lessons. The strategy is that our content has to be available on any platform and device that readers want it to be available on. The lesson is that people seem to be willing to pay for either the experience or the mobility of content that is available for free already. It’s a good sign for our industry that people are willing to pay for apps. We’ll probably take advantage of it. All our apps will be paid for once the initial advertising-sponsored time has run out.

The bad news is these experiences are very expensive to create. None of us have figured out how to churn out apps at low cost. So each app can cost anywhere between US$200,000 and US$500,000. And to maintain it and to make it lively and engaging requires either human intervention or more cost. As a result, it’s been a very expensive initial foray into mobile.

Knowledge at Wharton: Let’s turn now to business models. In overall terms, how would you describe your online revenue strategy? Are gains in digital revenues covering the declines in print advertising at the Post?

Narisetti: Over the past 15 years the Post has built up a significant digital revenue business and page view for page view we actually monetize the Washington Post better than any other news website in the country. We do a very good job of it. The challenge has been that we are doing it in an industry where supply is infinite. The pricing pressure from networks and big agencies are driving CPMs (cost per thousand readers) down as opposed to up. So even though the audience is really growing, your average revenue is falling, which is not what the industry had hoped would happen with digital. The industry has to answer its existential crisis issue, which is how do you monetize your content better, because there’s never been a better time for your content in terms of readership. But the ability to monetize hasn’t kept pace. The problem is not a journalism problem. It’s a journalism business model issue.

Knowledge at Wharton: What has been your experience with pay walls and what’s your view of some of the things that are happening with pay walls in the industry? One specific question: have you found that erecting pay walls actually imposes a penalty on you in terms of referral traffic from search engines because your site is no longer open?

Narisetti: Well, that’s why I think a lot of people are taking the metered wall approach, and leaving a lot of loopholes like search and social as an ability to read it despite the wall and go around the wall, which is, I think, a smart strategy. We currently have no plans to put a pay wall. We’ll keep a close eye on evolving technologies and business models. We would love to monetize our digital content and our readership better.

You know, our industry has never been fully supported by readers. I don’t have bureaus in 16 countries because somebody’s paying me a dollar. I have bureaus in 16 countries because Macy’s, Wal-Marts and Targets are taking full page ads in my paper. So I don’t see why just because readers are going digital, we suddenly expect them to pick up all our costs. It has to be a hybrid model and a frictionless hybrid model. And that’s where our industry has failed. That’s where Apple has succeeded, in coming up with a frictionless payment system.

Knowledge at Wharton: Which business models have you found most effective in generating revenue and which ones seem to be stuck in low gear?

Narisetti: A hard wall is not an option. Some British papers have tried it and I think it’s a mistake. I think the ability to personalize your website and serve personalized ads gives us tremendous opportunities. The ability to track your audience, in a way that doesn’t hurt their privacy is an opportunity. Charging for mobile apps and other devices is an opportunity. Eventually this industry has to evolve to the point where we cannot give away our content for free. Who pays for how much of it I think will have to be figured out.

Knowledge at Wharton: What is your view of some of the internet-only publications like the Huffington Post?

Narisetti: I’m a big fan of the Huffington Post‘s ability to take content from the New York Times, from the Washington Post, other people’s content and create more engagement around that content on the Huffington Post. There are times a story from the Washington Post will be played up with a big picture and a big headline that has 800 comments on the Huffington Post and we’ll have only about 150comments. So there’s a lot of learning for us to do from them. Some of us are embracing their smart engagement tactics. They’ve taught all of us a bunch of things.

The area that is problematic is that at the end of the day the Huffington Post takes more than it gives. Less than 0.4% of my referrals come from Huffington Post. It’s tiny, tiny, tiny. So I could easily go the route of saying, “You know what, I’ll block them from taking my stuff.” But my view is that if they can post content in front of a lot of other people, then it’s my problem and my challenge to figure out how to make my site more engaging and I shouldn’t blame them for that.