The irrational imitation of the online news industry
All across Europe, journalistic online startups are launching, aiming to produce and disseminate news in new ways. In our brave new world, the nimble startups of tomorrow were supposed to be overtaking the lumbering dinosaurs of yesterday online. But nearly all of these startups, even the most impressive and innovative sites, are struggling to survive because they face structural and strategic challenges that are not always recognized upfront. To succeed, European journalistic startups need to recognize these challenges, move beyond simply imitating others and find their own paths ahead.
The structural challenges for European journalistic startups have to do with the competition they face in content and advertising.
Startups are trying to establish themselves in a market for online news that is dominated by legacy media like newspapers and broadcasters. New journalistic ventures, such as Netzeitung, Rue89 and Il Post, are competing not only with other startups but also with the popular online offerings of news organizations like Spiegel, Le Monde and La Reppublica. These incumbents, and others like them, have built their digital strategy around their well-known brands and content from their existing newsrooms. They fund them with profits from their (generally declining) offline operations. Together with a handful of aggregators and portals, such legacy players dominate online news provision in most European countries.
As European news startups compete with established news media on the content side, they are also trying to carve out a position in a market for online advertising. That market is already dominated by U.S.-based giants like Google (and increasingly Facebook). A few large players attract most of the advertising, while innumerable smaller websites with display advertising keep down rates (so-called CPMs, cost per thousand impressions), eroding the value of the audience that each journalistic venture manages to attract.
Those are the structural challenges. The strategic challenges, meanwhile, concern the tendency toward irrational imitation. Startups across Europe need to break with two kinds of imitation in particular to develop sustainable funding models for the future.
On the one hand, many startups imitate what has been the dominant model for online news for the last 20 years. They produce content, make it available to users for free and try to cover costs by placing advertisements on their site. This doesn’t work. News that is free at the point of consumption has worked for broadcast television, radio and for-free newspapers for decades. But because of the structural challenges of online advertising outlined above, the model is not working on the Internet. Most sites operating on this basis are operating at a loss, and have done so for years. It is not clear that the dynamics of online news and online advertising are likely to change anytime soon, so to launch a site based on this model expecting to break even is a clear case of irrational imitation – doing the same thing, hoping for a different outcome.
Defending Arianna Huffington from the shareholder value police
By Maureen Tkacik
The views expressed are her own.
A few weeks ago I read an astonishing story about an army of lobbyists who had stormed Capitol Hill bent on repealing a law passed last year, thanks largely to the energies of a rival battalion of lobbyists. The dueling industries had spent tens of millions enlisting 242 former legislative officials to badger their replacements over a single vote.
Hanging in the balance was $50 billion in profits one industry was extracting each year from, inter alia, the other. But the real cost of the dispute, the authors insisted, was the incalculable one borne by the public when its ostensibly democratic government is entirely preoccupied, in the words of one dismayed senator, “trying to divide up the spoils between various economic interests.”
Which is what was so astonishing about the story: its aggressive and unabashed pursuit of the “public interest.” I was pretty sure this concept was extinct; Washington has become so thoroughly infested with paid promoters of some industry or another’s shareholders’ interests that it’s impolite to display anything more than passing contempt for the “public.” More puzzling still, the media outlet that published this extravagant display of public interest journalism was the Huffington Post, a site famous for many forms of content, most of which are pretty much the antithesis of 8,000-word corruption investigations.
Investigative journalism doesn’t happen much these days because it doesn’t serve anyone’s (i.e., the shareholders’) interests. That does not mean there is no demand for it, or that it cannot be cultivated into a profitable enterprise, but other forms of content are so much more profitable that there is almost no incentive to bother. In this way it is a bit like antibiotics, a class of pharmaceutical the industry has largely abandoned as a focus of research and investment despite the hundred thousand Americans who die every year from bacteria that have developed resistances to all the antibiotics in the existing arsenal. The fact is: they only die once. And developing and testing (and testing, and testing again) drugs is so expensive, it makes little economic sense to go through the costly motions on a class of drugs that “cure” the source of their own demand. Oxycontin—now there is a cash cow. “The Most Famous Cock Shots of All Time”—that is what the rational media market demands. (Outside of banking, the only surer cash cows involve defrauding the government or charging old folks to use email.)
It’s just a big lie that this piece–which makes some good points–is “convoluted,” “random” or not “decipherable.” Don’t let it get you down writer.
Bill Keller’s war on the Internet keeps the Times down
By Alex Leo
It seems every time Bill Keller takes pen to paper (or hand to keyboard) these days it’s to express displeasure with some aspect of the Internet. Last week he tweeted “#TwitterMakesYouStupid. discuss.” Without delving into the irony of using the trappings of the Web to attack it, you can see this man is spoiling for a fight. Ever since Keller started his column in the Hugo-Lindgren-revamped Sunday Times magazine, it’s been clear he’s swinging at Arianna Huffington. (Full disclosure: Before coming to Reuters I was a senior editor at the Huffington Post.)
In his first such column, he called The Huffington Post, and aggregators in general, “pirates” and “counterfeiters.” This level of vitriol is something Keller normally reserves for despots and the Bush White House, so why the exception here? Yes, HuffPo is nipping at the NYT’s toes to become the most widely-read news site on the Web, and yes, Huffington has poached some of Keller’s top talent in recent months, but the truth is that part of Keller’s animus must come from the knowledge that he helped create this monster of a site by refusing to engage with the Internet on the Internet’s terms. It’s not just Keller who ceded ground to The Huffington Post—it’s the news publishing world as a whole which, like the music industry, didn’t revolutionize fast enough and saw a new entity arise to classify their content.
To be fair to Keller, he’s right about a few things. Many of the editors Huffington claimed to employ pre-AOL were really content producers more than journalists—they made slideshows, polls, quizzes, they wrote headlines for AP stories, added images to blogs, embedded videos and aggregated outside news. With the influx of AOL money, Arianna has started to do what she always wanted: Hire prestigious journalists and bloggers and build an empire that earns as much respect as it does page views. This in no way means the page views will come from the respectable journalism—my guess is that Peter Goodman brings in 1/10th the traffic of a kitten-posting associate editor who earns 1/10th his salary does, but they serve different purposes and both are important for the brand.
But this begs the question: If what Arianna did was so easy why didn’t Keller do it too? Even if the NYT doesn’t want to aggregate—which is going to be an increasingly hard decision to defend—there are many things that Huffington Post did under the technological leadership of Paul Berry and the editorial chutzpah of the young content creators that made it a popular destination.
First, there’s SEO. HuffPost sometimes goes over-the-top with its content farm-y headlines, but that’s not what SEO has to be. Search Engine Optimization, used correctly, can make someone a better headline writer and is important from a reader standpoint. If you don’t have the story’s key terms in the headline or in the first sentence, a user won’t be able to find it internally or externally. NYT headlines are problematic for social as well: Having a vague, boring header may work in print, but it simply doesn’t fly on Twitter or Facebook.
Secondly, while some of the NYT blogs are great, they have not invested in or cultivated blog stars. They have no Yglesias, Klein, Linkins, etc, and their columnists aren’t really good stand-ins as they don’t interact with the Web the way bloggers do. (The notable exception to this is Paul Krugman whose blog is frequently updated and often cited.) This may stem from Keller’s distaste for aggregation and blogging by extension. As Felix Salmon wrote on this site:
#TwitterMakesYouStupid Discuss. My comment didn’t show up @nytimes, or my “User Account Banned” – ? @BostonPhoenix
Thanks to @whet @ The 312 – Chicago and “The New York Times’s Bill Keller comes to bury Twitter…” http://bit.ly/iA8xeY
Best of all, @psychcentral – “Psychology and mental health information and support…” and “8 Reasons Why Twitter Can Make You Happy” http://bit.ly/jDLTHY
Perhaps, Mr. Keller is just using one of the world’s first social networks – gossip!?
Bill Keller @nytkeller view full profile → 21 Tweets 130 Following 19,413 Followers 872 Listed Executive (((#Twitter #disabilities))) Editor – The New York Times.
Tech wrap: HTC trumps Nokia
HTC launched the HTC Sensation, offering an entire library of movie and TV shows via a wide screen, with a fast 1.2GHz processor. While Nokia, which dumped its once-dominant Symbian software earlier this year after falling behind Apple in the high-end handset market, launched two new models improved with better text input, faster Internet browsing and a refreshed Ovi Maps application, in a bid to stem customer defections while it works on a new offering.
“The new HTC Sensation phone reflects the mountain Nokia needs to climb to close the hardware and software gap with its rivals,” said Ben Wood, research director at CCS Insight. “On the day Nokia unveils the 600Mhz X7 ‘entertainment phone’ it has been trumped by HTC’s Sensation which has a dual-core 1.2Ghz processor”.
Cisco Systems will dump its Flip video camera division, retiring the popular brand rather than selling it in a first step toward reviving a company CEO John Chambers admits has lost its way. The decision to nix Flip, along with a planned folding of its Umi home videoconference business into the more successful TelePresence arm, underscores Chambers’ need to whittle down a money-losing consumer division that also includes Scientific Atlanta set-top boxes and Linksys home routers. Among the steps announced, Cisco plans to combine its lackluster Umi service with its TelePresence system for corporate clients. The company will also change the way it manufactures its Linksys line of networking equipment.
As smartphones gain functionality like video recording and GPS, what do you no longer see a need for?
The Huffington Post unfairly pocketed more than $100 million from its unpaid bloggers when AOL Inc bought the influential news website in February, according to a lawsuit filed on Tuesday. Arianna Huffington, co-founder of the website, sold it to AOL for $315 million.
VeriFone Systems, the largest U.S. maker of payment terminals, said it expects to ship over 1 million near-field communication (NFC)-enabled systems this year, underlining growing momentum for a technology that allows shoppers to buy with a wave of a smartphone. The number of mobile payment users is expected to top 340 million in 2014, ringing up $245 billion worth of transactions, according to research firm Gartner.
Fired AOL India employee talks
AOL cut more than 900 jobs around the world today — 20 percent of its staff — and India took a pretty tough cut from the axe: 400 jobs, according to several sources, and 300 contractors, according to another source. The nice thing for Reuters is that we have a big bureau in Bangalore, not too far from AOL, and plenty of our people know other people there and were able to get important details about the job cuts.
I coordinated some of the coverage from here since I’m hanging out in the bureau, and was happy when I heard that my colleague Nivedita Bhattacharjee got time to talk with one of the employees who was laid off today. Here is some of what he told her. We agreed to his request for anonymity because he wants to get work again and does not want to disqualify himself from jobs because he spoke to the press.
The entire team had a meeting, and they briefed us about how issues will be handled… we work in AOL. It’s something that we are always prepared (for). We were expecting an announcement soon.
They had some U.S.-centric plans, so they didn’t need us.
I’m leaving on good terms. It’s quite a good severance package… In many ways people are satisfied — we are getting four months’ salary as compensation and, depending on each case, there will be other benefits added to it.
Every fired employee (gets) four months of severance, which is pretty good, but with this action, nobody really has much faith in management, and (we) have been scarred by the experience of easily being let go … after being told for months prior that we were a valuable asset. …
Most technology product teams are being moved to HP. Services like finance, advertising,… paid services are now going to move to MindTree. Of course, not every team in full is being moved. They laid off some, and the remaining will become HP and MindTree employees.
David Eun Exits AOL after Huff Po purchase
Another high-level AOL executive is heading for the exit door after the company shifted its content strategy again with the $315 million acquisitionof the Huffington Post. David Eun (pictured left), the ex-Googler recruited by AOL Chief Executive Tim Armstrong to be president of AOL media and studios, is leaving. Eun is a causality of the Huff Po purchase that put the charismatic high profile founder Arianna Huffington in charge of AOL’s content.
In a memo to AOL employees posted on AOL’s technology blog TechCrunch, Eun described how he and Armstrong tried to find a place for Eun at AOL after the acquisition.
“I came to AOL last year to be the leader of the media organization. With the historic acquisition of The Huffington Post, my role and responsibilities as President, AOL Media are changing. Tim and I have discussed at length how I might continue within the new organizational structure, but ultimately there isn’t a role that matches what I am seeking to do.”
Eun was not immediately available to comment.
It’s the latest of a long list of switches and departures at AOL as the company attempts to turn itself into a media powerhouse dependent mainly on advertising revenue and tries to move away from its lucrative but dying dial-up business. At first, AOL’s Armstrong made a big deal about scooping up journalists to turn out original content around politics, sports, health and entertainment. That idea fell by the wayside as AOL decided to either outright buy that content — such as the purchase of the influential tech blog TechCrunch and Huff Post – or simply outsource it.
PaidContent’s Staci D. Kramer has the low down on the AOL executive shuffle and changes to the structure. Eun tells Kramer: “It’s not easy but I go back to why did I come. The job I came here for isn’t exactly the job that’s going to be available after.”
(Photo from AOL corporate site)
Huff Po? God, I get tired of useless anagrams when they aren’t necessary! It makes me less likely to read the articles when they start off by irritating me.
Lots of traffic, but show us the money
Traditional media companies have spent the better part of two years trying to cope with the double whammy of recessionary forces washing away advertising revenue and the changing habits of consumers. So how do a bunch of young buck Internet companies see themselves ? As media companies!
Well sort of. Not, you know, old school media companies. Rather, “technology enabled media companies,” as James Pitaro, vice president, media at Yahoo phrased it when pressed on Tuesday during a panel discussion about the future of media hosted by I Want Media.
Pitaro was on hand with a bunch of other big names like Arianna Huffington of The Huffington Post; David Eun, AOL Media president; and Josh Cohen, senior business project manager at Google News. (Go here for the complete lineup).
AOL and Yahoo are trying to one-up each other in becoming the largest producers of content by taking a high/low approach, or to use the media wonk term “pro-am.” These companies are hiring “high quality” journalists (pros) mixing it with a group of anybodies who churn out copy on various topics for little to no money (the amateurs). See: Yahoo’s recent acquisition of Associated Content and AOL’s Patch and Seed.
There was a lot of talk about traffic on this panel and how these sites are dominating traditional media outlets on the Web. AOL, Yahoo, Google News and now Huffington Post are usually in the top 10, if not the top five most visited news and current events Web sites, according to Nielsen Online. Moderator Patrick Phillips, founder and editor of I Want Media, pointed out that Huff Post was only five years old and there is already talk it will surpass the New York Times in traffic – a point that Phillips found “astonishing.”
It is. Yet traffic is one of many metrics to judge success. A better one is revenue and profit. That was hardly touched on this panel — only the last 10, 15 minutes of the discussion was devoted to advertising revenue, which all these sites depend upon heavily. One exception on the panel is Google, which is hauling in tons of advertising revenue and is in no rush to become a content producer. A site can have all the traffic in the world but if it can’t monetize it, what good are all of those uniques?
On another note, Huffington denied that her site was for sale after TechCrunch’s Erick Schonfeld wrote that Yahoo is looking to acquire the Huffington Post. Pitaro said Yahoo doesn’t comment on rumor and speculation and that Yahoo has “a fantastic relationship with the Huffington Post.” Huffington goes into some detail with Andy Plesser of Beet.TV.
from DealZone:
Stress-Test Expertise
It seemed only a bit odd that media star Arianna Huffington was the guest host on CNBC the day the all-important stress test results were due. Not to play down her credentials in media or commentary circles, but where were the celebrated bank analysts, the corporate chieftains and the investment gurus who so routinely enjoy a dose of the limelight on America's Business Channel?
Wasn't this the perfect day for a newsmaker rather than a news talker? The Huffington Post founder has been a good reality check on market cheerleaders who live on CNBC, but on Stress-Test Thursday, the less-than-casual viewer expects insiders with insight. It tasted like something strange and exotic had made its way into the DealZone coffee machine.
Then disgraced former New York Governor and Attorney General Eliot Spitzer joined the fray, and the slightly odd became surreal. Spitzer, who casually noted he was invited to the show (hint, hint), gave a spirited view from the nosebleed seats, far back from the federal policymakers' bench.
Forget all this stress test stuff -- what about Spitzer's attempt at resurrection? Anchor Joe Kernen asked whether Spitzer the AG would have prosecuted Spitzer the governor and Spitzer the guest legal expert answered no, arguing that issues of judgment are more important than issues of law.
This should be equally true for the banks, Spitzer said. But the banks' transgressions were far more damaging to many more people than Spitzer's own. It's hard to believe moral suasion and limiting access to cheap funds would have been enough to persuade greedy bankers to act more responsibly. Certainly, shareholders would not have rewarded them for behaving better while others were making a killing selling toxic investments.
DealZone commends CNBC's producers and guest bookers for creative thinking. While the stress test results are not due until late this afternoon, so much has been leaked already that the minutiae still to come will probably numb the minds of even the hardiest financial news junkies. With no news to break, the Huffington/Spitzer show turned out to be refreshingly watchable. Indeed, who understands a stress test better than Eliot Spitzer?
Deals of the Day:
Huffingtonpost to fund investigative journalism
Just got back from a panel discussion at Michael’s restaurant in Manhattan where Huffingtonpost founder Arianna Huffington said that the news and commentary website is going to raise money to fund investigative journalism projects.
I asked her for more details afterward. She said there wouldn’t be any for another three months or so. That leaves me with precious little more to deliver than context. Her plan comes as the news business itself faces dire code-orange-style threat levels — many U.S. newspaper publishers are mired in debt and their ad sales are thinning, making it hard to see how they will soldier on. Not only that, investors are fleeing from them like the proverbial rats from a sinking ship and their equity value is hitting the low single digits.
For all media companies, whether or not they’re in the hands of investors, the ad revenue decline is hitting them hard, and all sorts of publications are axing staff. It leaves many media talking heads and bloggers wondering whether news will survive into the 21st century, at least in the way we know it.
Huffington’s website is small compared with big professional publishers, but it looks like she’s latching on to a growing trend. Mark Cuban, who was charged by the Securities and Exchange Commission with insider trading on Monday, is financing several investigative journalism ventures, including former CBS newsman Dan Rather’s reports. Two other projects that he has funded, sharesleuth.com and bailoutsleuth.com, seek to expose financial wrongdoings as well as poorly thought out ways to spend Wall Street bailout money amid the financial crisis. Both are trying to tackle big projects that it is becoming increasingly hard to pay for at many traditional media outlets.
There also is ProPublica.org, of course, the privately funded investigative journalism operation that’s helmed by former Wall Street Journal Managing Editor Paul Steiger.
As for Huffington, there is nothing else to report, but for now — Investigate this space.
(Photo: Reuters)
