Do online business models matter?

By Felix Salmon
August 31, 2013
Nick Bilton has an odd column up about Business Insider and NSFWCorp -- two publications which he has picked to represent the "reliant on ad revenue" and "reliant on subscription revenue" business models, respectively.

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Nick Bilton has an odd column up about Business Insider and NSFWCorp — two publications which he has picked to represent the “reliant on ad revenue” and “reliant on subscription revenue” business models, respectively. He’s particularly interested in the way in which Business Insider published Nicholas Carlson’s 22,500-word opus on Marissa Mayer:

When the piece was published on Sunday, many readers asked why Mr. Carlson did not publish it as an e-book, or even as a physical book, and charge people to read it, rather than simply place it online free as a very long blog post.

Actually, the piece was published on Saturday. But Bilton misses two important points here. Firstly, publishing the Mayer piece as an e-book would in no way preclude Business Insider from putting it online for free as a very long blog post. The classic example of ultra-longform blog journalism is the John Siracusa review of OS X which Ars Technica publishes every time a new version comes out. The review can be read online, for free — or it can be bought as an e-book, for $5. Creating and selling the e-book is non-trivial, but it’s worth it, given that thousands of people buy it.

So when people asked why Carlson’s biography wasn’t available as an e-book, they weren’t implying that publishing as an e-book was an alternative to publishing online. It’s just that a lot of people like to read very long pieces in book format, and are willing to pay to do so. As a result, offering such things as an e-book can make good sense, even as most readers will continue to find the piece online, in its free version.

On top of that, it’s telling that Bilton simply picks the longest article that Business Insider has run, and then asks whether that article should be singled out for what you might consider a story-specific paywall. Read anything else on Business Insider you like, for free — hell read everything else on Business Insider, if you can — but for this particular piece, he seems to think, BI might decide that it was going to charge you money. That’s not even the model of NSFWCorp, which charges subscribers, in Bilton’s words, “a hefty $3 per month” — charging for access to the whole site, not on a per-article basis. (The charge to subscribe to the NYT online starts at more than that per week.)

One of the great strengths of Business Insider is that it is extremely good at providing fast, punchy news. It generally keeps its items short, because that’s what its readers want. Working with the speed and attitude of BI is not easy, but it’s what the site specializes in, and it’s where the site’s value lies. Having the demonstrated the real value of short and fast, it would be decidedly weird for BI to then turn around and charge a premium for long and slow — exactly the kind of thing where it doesn’t have comparative advantage.

If BI were to ever think about charging readers for content — beyond its niche analysis product, that is — then the only model which really makes sense is the monthly subscription, rather than Bilton’s pay-per-piece hypothetical. BI’s not going to do that, for many reasons, including the fact that it’s looking for growth and scale, rather than just a model which allows great journalism to pay for itself. (My favorite part of the article comes when Bilton reveals that NSFWCorp’s revenues allow it to employ “several seasoned full-time writers” — something he doesn’t feel the need to mention about BI.)

What’s more, despite the fact that BI is basically just about the quick hits and listicles and pageviews, I wasn’t surprised to see Carlson’s magnum opus. Bilton tries to explain the contradiction, but comes up short:

It seems that Business Insider made the right choice by choosing not to charge people to read the profile on Ms. Mayer, and instead giving it away online. The article was shared more than 13,000 times on Facebook and 5,500 times on Twitter, all of which helped garner nearly 900,000 page views for the article.

Er, no. Henry Blodget’s slideshow of what his crotch looks like on American Airlines economy class has got more pageviews than the Mayer profile, and there are many other posts whose numbers dwarf both of those. If the purpose of sending Carlson out to do months of detailed reporting was just to generate pageviews, then his piece was a clear failure: it would have been much easier, and much cheaper, to just put up a listicle about porn stars.

No: the reasons for encouraging Carlson to write this piece — and for putting it online for free — aren’t really about pageviews, or the ad revenue it generates, at all. Investigative journalism never pays for itself, and this piece is no exception. But there are a lot of good reasons to do it anyway, if you’re Henry Blodget.

Advertisers will think of this article when they think of Business Insider, understand that it’s a serious news outlet, and be that much more willing to pay premium rates to advertise on the site as a result.

Readers who like having fast news during the day like having meatier stuff to read over the weekend.

Writing this article is a fantastic way for Carlson to cultivate sources, and that in turn will mean that his future output is that much better.

Other writers who might be thinking about joining BI will see what Carlson was given the freedom to do, and be more likely to join; conversely, existing talent will be more likely to stay, knowing that such projects are possible and encourged.

And overall, a relatively small number of articles like this can do wonders for the whole brand value of BI itself.

So please, enough of the naive idea that on a wholly ad-supported website, pageviews are the only things which matter. By that measure, Neetzan Zimmerman would be the hottest journalist in the world: he got more than 22 million pageviews last month, and puts up similar numbers every other month as well. But there’s more to ad-supported journalism than reblogging viral videos: that’s why Jonah Peretti hired Ben Smith to run BuzzFeed, rather than, say, Zimmerman.

Ultimately, it’s far too easy to get caught up in the “business model” question, and thereby lose sight of the much more important question of who’s doing the best journalism. NSFWCorp is producing great stuff, as is Business Insider, as is the New York Times. All three of them look as though they’re going to find a way to make that journalism pay, which is fantastic. And here’s something else they all have in common: if one of their writers finds a great story, and needs to spend a lot of time deeply reporting it before it can be published, all of them will make sure that can happen. When it comes to what matters, it turns out that profound differences in business models make much less difference than you might think.

More From Felix Salmon
Post Felix
The Piketty pessimist
The most expensive lottery ticket in the world
The problems of HFT, Joe Stiglitz edition
Private equity math, Nuveen edition
Five explanations for Greece’s bond yield
Comments
3 comments so far

To be fair, I think it does matter, quite a lot, whether IN FACT any of these firms is going to find a way to earn the money to cover their willingness to shell out for quality journalism. Just because Bilton is doing a terrible job intelligently addressing that question, doesn’t mean it is not an interesting question to discuss. (Similarly, the fact that many people, particularly stoners, say a lot of stupid things about the nature of consciousness, does not mean it’s not worth reading, say, Daniel Dennett.) Sturgeon’s Law applies.

Posted by Auros | Report as abusive

All good points Felix. Above all the Mayer piece was an exercise in branding, and it’s a bit of a shame that a lot of people in the journalism/content business don’t ‘get’ that. I think Buzzfeed in particular has been relentless in these kind of branding exercises, and IMO they’ve been one of the key pillars to its success over the past few years.

Good to see other publishers joining the party.

Posted by AndrewDuffy | Report as abusive

Modern economic thought has been pushing the idea that each and every thing needs to generate a profit. Boeing tried that model with its 787, and got an expensive lesson in business and economics, though it isn’t clear what they’ve actually learned. In the real world, all one really needs is an aggregate profit.

BI seems to have picked up on this. Not every article, or even every reporter, needs to be profitable. It is perfectly reasonable to lose money in certain areas, as long as these losses are helping increasing overall profitability. That’s why we have multi-cellular life.

Posted by Kaleberg | Report as abusive
Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/