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June 20 2013

19:05

Seeking an ocean of audience: Honolulu Civil Beat partners with Huffington Post to seek new revenue streams

When Honolulu Civil Beat launched three years ago, it took some contrarian stands. At a time when many civic-minded journalism startups were filing for nonprofit status, Civil Beat bet on succeeding as a for-profit. When many thought digital advertising would be the key driver of revenue growth, Civil Beat didn’t take ads. And when most news startups were trying to build an audience by giving away their content, Civil Beat was betting on subscriptions — and pricy ones, at that.

The news site’s latest move — partnering with The Huffington Post to launch HuffPost Hawaii this fall — is an attempt to balance out some of those bets in a quest for greater revenue diversity. HuffPost is, of course, dedicated to free content with wide reach, and its business is built around the kind of ads that Civil Beat ignores.

“Civil Beat is a model with a focus of trying to build something new — not just in how we write stories and deliver them, but how we pay for them,” site general manager Jayson Harper said. “Huffington Post in some sense provides us with a megaphone to give that to a larger population within the state who will hear and see who we are.”

Founded by eBay founder Pierre Omidyar and Randy Ching, Civil Beat focuses on politics, government, and investigations, and it charges a comparatively steep subscription price to read and comment on the site — $20 per month, higher than even The New York Times. That will remain. The two sites will run in parallel; Civil Beat will look and operate essentially the same way it does now, with some HuffPost Hawaii stories running off of its homepage and subscription prices unchanged. HuffPost Hawaii will exist as a separate site creating most of its own content, with Civil Beat stories excerpted there as well.

Civil Beat says the two sites will also maintain “separate staffs,” though that applies only to the writer-reporters, since editor Patti Epler and general manager Harper will be in charge of both sites.

The partnership is not a comment on Civil Beat’s commitment to subscriptions, Harper said, and the site is not in financial trouble. Still, “the subscription model is a very tough model to create complete financial sustainability,” he said.

Unlike Civil Beat, HuffPost Hawaii will have traditional advertising displayed alongside quick takes on Hawaii news and, according to HuffPost’s announcement, content like “slideshows of Hawaii beaches.” Harper said the Civil Beat organization will “absolutely” benefit from that revenue, though a confidentiality agreement barred him from releasing the specifics of how and if that money will be allowed to flow to Civil Beat.

“The real reason we’re doing this is because we do see ways to grow revenue and it makes sense for both parties,” Harper said, referring to potential new Civil Beat subscribers, revenue from HuffPost Hawaii ads, and the additional brand awareness that may make their sponsorships more valuable.

Civil Beat, which currently operates with six reporters and two editors, will indirectly benefit from the collaboration because it will allow Epler to hire three new reporters for the HuffPost side. “I hope that the Huffington Post staff can be covering things like the governor’s press conference, or, say, a helicopter that goes down in downtown Honolulu — they’ll do that, and our staff won’t have to do that anymore,” Epler said. “That will free up some of our beat writers to do more in-depth things,” like a recent multi-part investigation into oversight of a polluted local waterway.

In search of revenue diversity

In Hawaii, as elsewhere, the media business is in flux. Financial troubles forced Honolulu Weekly this month to announce it was publishing its final issue (though its editor has now said she is attempting a revival). Three local TV news stations merged in 2009. The remaining Honolulu daily, the Star-Advertiser, also operates with a partial paywall (the site’s front page, breaking news, and blogs remain free). But there is still some audience loyalty: Ad Age recently reported that Hawaiians are paying attention, with 47 percent of Honolulu adults saying they read a daily newspaper, one of the highest numbers in the country.

As his model for diversifying Civil Beat’s revenue, Harper pointed to the Texas Tribune, which is grant-supported but also makes significant money from events and other sponsorships. It’s not an apples-to-apples comparison — the Tribune is a nonprofit, and Texas’ population is 19 times the size of Hawaii’s. Still, Harper is working to organize sponsored events and potentially allow for sponsors to claim parts of the Civil Beat site itself. “It’s not the only way to build a sustainable revenue model for online news organizations, but it’s a good start,” he said.

Epler and Harper recognize that The Huffington Post’s model is built around traffic and Civil Beat’s is not. But they hope their collaboration with The Huffington Post helps them with those sponsorship efforts, too. “To increase the share in the market of the stories we’re doing has tangible benefits — the more we can talk to our partners and see people talking about those stories, the better,” Harper said.

For The Huffington Post, the Civil Beat collaboration is more like its international partnerships — which include agreements with Le Monde for its French edition, Gruppo Espresso in Italy, and The Asahi Shimbun in Japan — than its other U.S. city verticals. Those international partnerships excerpt content from those news organizations, whereas verticals like HuffPost Chicago, Detroit, and Miami simply collect content related to those metro areas. In explaining the Huffington Post’s interest in Hawaii, Arianna Huffington cited her relationship with Omidyar and seemed to view the site as a chance to learn from the Hawaiian culture.

“As the world’s oasis for unplugging and recharging — and the home of the Aloha spirit — Hawaii is an ideal place to explore all these themes and to engage the community,” Huffington said in an email.

On Civil Beat itself, reaction to the partnership has been largely, well, civil — minus a few Facebook comments. “Some people were like, ‘This is the end of Civil Beat, nice knowing ya, the Huffington Post is going to take over,’” Epler said. But their model hasn’t changed, she insisted. “I wrote a column maybe two weeks ago saying, we’re not getting eaten by the HuffPost monster. That’s just not what’s happening.”

Photo of downtown Honolulu from Diamond Head by John Fowler used under a Creative Commons license.

August 13 2012

21:01

Live broadcast: Why The Huffington Post and Boston.com are getting into streaming media

Can a news site become a TV network? Or a radio station? Or if it can’t become one, can it at least grow to include one?

These aren’t theoretical questions, as Monday saw the launch of HuffPost Live, the new streaming TV-style video network from The Huffington Post, and RadioBDC, an alternative streaming radio station from Boston.com, the webbier side of The Boston Globe.

The launch of two media-jumping online ventures is likely a coincidence — though getting clear of the Olympics was probably a motivator for each — but they share many commonalities and the same goals. On their first day, both gave early indications of what they see as their strategy for success. Both Boston.com and The Huffington Post want to use digital distribution to offer something like a traditional broadcast product, but at a much lower cost than what starting a TV network or radio station ran pre-Internet. They both also want a shot at a new channel of advertising dollars to complement the display-heavy advertising they rely on with their main products. In order for both to work they’ll need to find, maintain, and grow an audience and advertisers. On launch day, HuffPost Live counted Cadillac and Verizon as their “founding partners” for the network. On RadioBDC, launch advertisers include Miller/Coors, Anheuser Busch, and Comcast, a spokeswoman told me.

HuffPost Live, the latest spinoff of Arianna Huffington’s media empire, is an attempt at merging live TV with the expediency and interconnectedness of the web — to get the engagement promised by second-screen visions of television watching by building for the web from the start. HuffPost Live promises 12 hours of live weekday programming that combines hosted segments and audience contributions. “With HuffPost Live, you’re invited to be part of a different kind of conversation, whoever you are, wherever you are,” Arianna herself said in the network’s opening minutes.

But while the medium may be shifting, a lot of the content looked familiar. On day one, HuffPost Live had many of the familiar trappings of cable news: a well appointed studio, handsome hosts, and various treatments on the day’s news. But instead of Wolf Blitzer barking at reporters and pundits in the Situation Room, HuffPost Live relied on Google Hangouts. Monday’s first segment, a roundtable on Mitt Romney’s pick of Paul Ryan as his running mate, featured a diverse cast of contributors live from their bedrooms/guest rooms/home offices. As novel as that was, the guests still fit into familiar archetypes: a conservative, a liberal, a knowledgeable reporter, and an everyman. That seems to be the model for HuffPost Live, as a segment later in the day on home foreclosures featured Huffington, the head of a mortgage-resolution organization, actor John Cusack (!), and a California man struggling to keep his home.

Of course, HuffPost isn’t the only one investing in live video. The advertising dollars are typically better than in traditional web display advertising; as Raju Nasrietti of The Wall Street Journal told us in June: “We are sold out. There is no shortage of demand to generate more video views.”

HuffPost Live wants to differentiate itself from other online video in terms of its content and its “live-ness.” The segments are like taking a dive into different HuffPost verticals — politics one minute, entertainment the next, technology later. (No sideboob yet.) But what sets it apart is the audience experience: The interface features a video player on the left, a comment stream on the right, and a big red “Join This Segment” button. A module above the video player lets the audience keep tabs on what stories and segments are coming down the pike, like the left rail on ESPN’s SportsCenter.

Boston.com’s move into radio

The strategy at Boston.com’s RadioBDC also seems to borrow a lot from its terrestrial peers. The streaming station is an ambitious project for Boston.com, which scooped up the on-air talent from Boston’s WFNX shortly after the station’s frequency was purchased by Clear Channel. As far as new ventures go, RadioBDC will stick closely to the traditional radio format, broadcasting 24 hours a day, with DJs on air from 7 a.m. to 10 p.m. At noon Monday, on-air host Julie Kramer kicked-off the launch with an appropriately titled show, “Lunch at Your Desk,” and it sounded a lot like you’d expect an alternative radio station to sound.

With no terrestrial signal, that desktop crowd, along with the mobile crowd, will be RadioBDC’s main audience. They’ve already launched apps for iPhone and Android, but the power of Boston.com promotion will likely be key. The site is always among the most visited regional news sites with over 6 million uniques a month. RadioBDC has its own page under the Boston.com umbrella, but it also receives prime billing on Boston.com’s homepage, with a banner ad and button to launch the radio player as well as a widget near the top of the page.

By default, RadioBDC pops out into a separate window, making it meant for hanging out in the background during the work day. If you’re the type of person that wants to hear Elvis Costello, Weezer, or R.E.M while you work, you can now hear the music you love while clicking through Red Sox news or updates on the Massachusetts senate race. For Boston.com, that potentially means exposing the audience to double the ads, on the site as well as on the radio stream. Lisa DeSisto, general manager of Boston.com, said over email that “streaming spots are just one component of the marketing packages which include digital assets, event sponsorships, social media tie-ins, and promotions.”

HuffPost Live also seems designed for the specific purpose of keeping the audience around, either to keep tabs on what’s being talked about in comments or to contribute to an upcoming story. HuffPost also wouldn’t mind if you kept it open in a tab all day and popped in from time to time.

While they share a launch date, RadioBDC and HuffPost Live operate at different scales: RadioBDC has a handful of people on staff, HuffPost Live hired around 100 people for the launch. Success will look different for the two entities. But they’re both counting on a similar audience: the bored-at-work crowd, desk jockeys looking for something other than an Excel spreadsheet to pay attention to. Considering how much time we spend tethered to our computers this strategy makes a lot of sense. Individually our stray, off-task web surfing may not amount to much, but HuffPost and Boston.com are hoping that, collectively, it adds up to many millions of hours. TV and radio originally brought the news and music live into people’s living rooms. Now HuffPost and Boston.com want to bring news and music live to your computer, tablet, or phone during the day, probably at work. Think of it as the earbud audience.

April 16 2012

15:28

Why the Huffington Post doesn’t equivocate on issues like global warming

The Huffington Post wants gobs of traffic. It also want reader engagement. But there are some things it just won’t do — like equivocate on whether climate change is real.

HuffPost Science recently featured a story on former astronauts and scientists upset with NASA’s position connecting carbon dioxide to climate change. It’s not new to see sides clash on the issue, and any editor knows it’s a debate that will predictably spill over into the comment thread on a story. HuffPost Science senior editor David Freeman offered up this question at the end of his piece: “What do you think? Is NASA pushing ‘unsettled science’ on global warming?”

One problem: The question violated one of the Huffington Post’s editorial policies. Not long after the piece was posted an editor’s note replaced the question, saying in part:

We’ve removed the question because HuffPost is not agnostic on the matter. Along with the overwhelming majority of the scientific community (including 98% of working climate scientists), we recognize that climate change is real and agree with the agencies and experts who are concerned about the role of carbon dioxide.

“The way the call for engagement was raised was as if we’re somehow agnostic about the reality of climate change,” Arianna Huffington told me.

Huffington framed the incident for me as one of editorial policy. But this isn’t a simple case of clashing stylebooks, of one outlet favoring the Oxford comma and another leaving it out. This is something more akin to a policy position: Within the editorial confines of HuffPost, issues like climate change and evolution are settled, Huffington told me. That doesn’t mean divergent viewpoints aren’t welcomed, she said — just that on certain issues the reporting won’t offer up a false equivalency.

“Where truth is ascertainable, we consider it our responsibility to make it very clear and not to — in the guise of some kind of fake objectivity, the media often pretend that every issue has two sides and that both sides deserve equal weight,” Huffington said. “That’s not the case, and that’s not our editorial stand.”

Traditionalists might find the idea of a mainstream, general-audience news organization staking out these kinds of stances in news stories radical. Huffington doesn’t see it that way, saying that traditional media spends far too much time trying to provide balance on issues that are, within certain facts and other data, settled. For her journalists, she said, that means doing reporting that assesses facts and doesn’t “pretend that the truth is supposed to be found in the middle,” she said.

“Editorially, we train our editors and reporters to basically not buy into what Jay Rosen calls the ‘View from Nowhere’ journalism,” she said. “We see our role more as doing everything we can to ferret out the truth, rather than be a kind of Pontius Pilate washing our hand of the possibility of truth.” That’s evocative of NPR’s new ethics guidelines, which make a similar distinction:

In all our stories, especially matters of controversy, we strive to consider the strongest arguments we can find on all sides, seeking to deliver both nuance and clarity. Our goal is not to please those whom we report on or to produce stories that create the appearance of balance, but to seek the truth…If the balance of evidence in a matter of controversy weighs heavily on one side, we acknowledge it in our reports. We strive to give our audience confidence that all sides have been considered and represented fairly.

Along with HuffPost’s internal editorial guidelines, this incident also demonstrates the value of comments and engagement to its brand. (Huffington told me the site had 7 million reader comments last month.) After all, this wasn’t about anything in the body of Freeman’s work — just his call-to-engagement question to readers.

Huffington Post standards editor Adam Rose told me they quickly added the editor’s note on Freeman’s story because they wanted to be transparent with readers about their editorial process. Instead of offering up a reworded question, they wanted to make it clear why the story had been changed. “I think it’s important that our readers know that and can trust that,” he said. “I think by being direct it develops a sense of trust with our readers who understand that we are not equivocating on the issue of climate change.”

The story’s racked up more than 3,300 comments and counting — not an unusual number by HuffPost standards but not an insignificant one either. Rose said he, Freeman, and Huffington were pleased with the quality of the conversation in the comments of the story.

This is where HuffPost’s stance on climate science and other issues has a practical element: The site is placing a marker to let readers know where it stands. Huffington says readers appreciate that kind of honesty and will reward news organizations for it. “Because we are clear about where we believe the truth lies, I believe we elicit a richer kind of response from our readers,” she said. It also helps in moving stories forward. The site already has a follow-up story to Freeman’s piece by reporter Lucia Graves that found that none of the former NASA personnel who signed the climate change letter actually worked in climate science.

Elevating the level of online comments is a fairly decent, if not constantly shifting, goal, but Huffington sees the editorial guidelines as promoting something broader. “To be able to see clearly where truth lies on on side or the other, as it happened in this particular instance, is not to abandon objectivity — it’s to, in fact, embrace a higher standard of journalism,” she said.

Image by JD Lasica used under a Creative Commons license.

August 03 2011

04:50

Arianna Huffington: How HuffPo got to 100 Million comments

Mashable :: Readers of The Huffington Post like to share their opinions: That much is obvious from the comment counts on its stories, which can frequently number more than 10,000. HuffPo recently celebrated a testament to the large, engaged audience it has attracted: its 100 millionth comment last weekend.

The online newspaper now averages more than 175,000 comments per day, and the site received more than 4.45 million comments last month alone, says founder Arianna Huffington.

In a phone interview with Mashable, Huffington attributed HuffPo‘s success to several factors, the chief being pre-moderation of comments.

Continue to read Lauren Indvik, mashable.com

July 30 2011

10:44

Arianna Huffington's carte blanche and AOL's vanishing video strategy

Digiday Daily :: When AOL acquired The Huffington Post in February, Arianna Huffington was given carte blanche over the company’s entire editorial strategy. Since that time, video seems to be nearly forgotten at AOL. The company has failed to execute on the ambitious original Web video content plans laid out in the pre-Arianna era. That’s despite a booming online video ad market and increasing appetite for Web video among consumers.

What’s Arianna’s video strategy?

Continue to read Mike Shields, www.digidaydaily.com

July 10 2011

20:41

Arianna Huffington: political elite would not stuck with the NOTW story, but journalists

Huffington Post :: A reminder. This week Britain's phone hacking scandal mushroomed from journalistic black-eye to a crisis engulfing the UK's most powerful institutions. News of the World was published for the last time today.

[Arianna Huffington:] Although filled with journalists behaving badly, it's important to remember that it was journalists, especially the Guardian's Nick Davies and Amelia Hill, who diligently stuck with this story for years and brought it to light -- something the political elite and the paid-off police wouldn't do.

Continue to read Arianna Huffington, www.huffingtonpost.com

June 12 2011

16:34

How's life? Inside Huffington Post-AOL, territory's marked

Gawker :: Sure, we'd heard there was a civil war at AOL following the Huffington Post merger. But we never imagined we'd be hearing tales quite so evocative of schoolyard bullying. Team HuffPo is apparently the meanest clique at AOL Junior High. "She steals people's lunches," read one of the first emails to Gawker's inbox after we asked for stories from inside the merger earlier this week. And that was an AOL journalist's summary of new boss Arianna Huffington.

Continue to read Ryan Tate, gawker.com

June 03 2011

18:37

On CNN - New York Times' Jill Abramson: transition to online media is "thrilling but challenging"

Mediaite :: Last night, Jill Abramson, the new executive editor of the New York Times gave an interview to CNN’s Jessica Yellin. The increasing digitalization of news is an issue for her that is changing journalistic practices, but at the helm of a paper that has made its mark as just that, a paper, Abramson was optimistic about the future of print. Although she refused to speculate how much longer we will be reading actual papers, she called the transition to online media “thrilling but challenging”.

Continue to read Lizzie Manning, www.mediaite.com

18:19

A bone of contention? - Why Bill Keller stepped down as New York Times executive editor

New York Magazine :: Keller's columns infuriated some members of the newsroom, especially the Times' media desk, who felt that the executive editor should be a kind of impartial honest broker. Times media editor Bruce Headlam and media columnist David Carr had an intervention with Keller to explain how his columns were hurting their ability to cover the industry.

[Bill Keller:] Even though I knew I would cause a certain amount of consternation in the building, I decided that was okay because it was worth having a conversation about this.

Then, last month, Keller wrote a column critical of Twitter, calling it the enemy of contemplation." Inside the Times, the column set off more alarms. Social-media staffers complained that Keller was signaling that he didn't like Twitter even as the paper was trying to encourage reporters to embrace the new tool.

Bill Keller stepped down as Times executive editor, but why?

Continue to read Gabriel Sherman, nymag.com

May 29 2011

05:07

Huffington Post blogger lawsuit: Jonathan Tasini got what he was looking for - exposure

paidContent :: Lawyers for The Huffington Post have moved to dismiss Jonathan Tasini’s novel lawsuit claiming that the popular internet newspaper actually owes money to its unpaid bloggers. Tasini got exactly what he was looking for from his free blogging, HuffPo lawyers argue—exposure—and his lawsuit insisting on payment must be thrown out.

Continue to read Joe Mullin, paidcontent.org

May 25 2011

21:47

Huffington Post employees flee ... AOL

Business Insider | SAI :: So far very little has been said about the HuffPo employees after it was purchased by AOL. Many of whom have been with Arianna for years, and who, on many levels, are responsible for building HuffPo and making it at valuable as it was. - Turns out many of them are not happy. "Brutal", "Awful", "The worst few weeks." And the cracks are beginning to show.

Continue to read Glynnis MacNicol, www.businessinsider.com

May 24 2011

05:53

Manipulated AOL stock? - Arianna Huffington: "if you buy AOL stock right now ..."

TNW Industry :: Section 9 of the Securities Exchange Act (link to PDF download) of 1934 prohibits market manipulation, a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency.

According to a Tweet (see below) from Dylan Byers, a reporter for AdWeek, Huffington, speaking to Michael Arrington, founder and co-editor of TechCrunch at TechCrunch Disrupt New York, stated the following,

Clipped from: twitter.com (share this clip)

@DylandByers tweet: "Huffington to Arrington: 'Ithink if you buy some AOL stock right now, you're goint to make a lof of money.'"

That said, it could be argued that that Huffington is engaging in market manipulation concerning AOL’s stock.

Details - continue to read Jeff Cormier, thenextweb.com

April 28 2011

15:00

The newsonomics of story cost accounting

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

What’s a story worth?

Last week, I looked at a single investigative story (California Watch’s “On Shaky Ground“), and we saw the tab of half a million dollars for a 20-month-long tale of sleuthing. What about that ordinary daily story, quotidian journalism as we know it — the grinding out of less eventful articles, the kinds of things that keep us informed but don’t offer epiphanies? How much does it cost, and how much does that matter to the future of the news business?

It’s not an academic question. This week, McClatchy added to the long line of down financial reports, telling us that it was down 11 percent, year over year, in ad revenues and 9 percent in overall revenues, for the first quarter. That announcement follows on from similar reports from The New York Times Co., especially its regional properties, and Gannett. The U.S. news industry is extending its unwanted record: 21 straight quarters of revenue down quarter to quarter. That’s a lost half-decade.

Add up those down revenues and the need to maintain profitability — for public or private owners — and there’s but a single answer: cut costs. Certainly, the industry has cut out major costs in the last three years, but cost-cutting is slowing, if you look at the company reports. The New York Times’ costs were flat in the first quarter, Gannett’s down 0.9 percent and McClatchy’s down 6.5 percent. That’s in large part due to rising newsprint prices, making it harder to get costs more appreciably down. With those continuing revenue declines, though, expect more cost-cutting. It’s a given.

So, let’s ask about that daily story. What’s it cost?

Of course, we’ve never looked at it that way. We’ve hired people, told them to write, at times monitoring their production, but rarely taking a look at the cost of what they’re producing. Given the pressures of the day, given the Demand Media model and given the predilection to start counting whatever can be counted (“The newsonomics of WaPo’s reader dashboard 1.0“), story cost accounting is inevitable.

In fact, it’s already started. Let’s take a brief look at what is bound to become a bigger topic in the months ahead, the newsonomics of a single story.

Clark Gilbert, Salt Lake’s dean of disruption, is getting into the nitty-gritty of retooling editorial content production, top to bottom, and that includes getting a handle on differing costs of content. Gilbert is a key part of the team that is transforming the media properties of the daily Deseret News and leading local TV and radio stations KSL, all owned by the Church of Jesus Christ of Latter-day Saints, better known as the Mormon Church. Last August, Gilbert announced one of the most major restructurings in journalism, making major staff cuts — a prelude to the re-architecting now being done. That restructuring includes the launching of Deseret Connect, an initiative to round up pro-am user-generated content from around Utah, and around the globe.

The new CEO of Deseret Media will soon be able to tell you exactly how much articles cost him. He’ll specify the differing price points of local, proprietary content, of AP content, of a blog post written halfway around the world, and lots more.

For now, he draws upon his experience as a Harvard Business School prof and strategic consultant. From that career work, he estimates the following, general cost metrics for the content offered by news companies in print and online:

  • $250-$300 per staff-written story;
  • $100 per stringer story;
  • $25 per Associated Press story;
  • 5-12 for “remote” stories, largely written by the emerging class of bloggers

“You better know your cost per story,” he says. “That’s the kind of rigor you need.”

As focused as he is on building digital ad revenues, he makes the point directly: “You have to work both sides [revenue building, cost reduction] of this.”

“It doesn’t mean I’m not willing to pay for content,” says Gilbert. “I’m paying a boatload for stories that are a commitment to my audience.” It’s a straightforward strategy: If you are going to pay a boatload for some stuff, you better pay a lot less for other stuff.

Still, those numbers are bound to chill many a journalist. You think posting reader metrics in newsrooms is still a point of contention — wait ’til story cost accounting becomes mainstream. And it will. It’s just simple manufacturing, and like it or not, that’s what the news business has long been. Manufacturing, with lots (New York Times, Wall Street Journal) of quality added or with (insert your favorite rag here) just enough to draw ads. News creation used to be a sunk cost, with headcount a small and usually polite battle between editors and publishers. That was in stable times. In these times, knowing business drivers, down to the dollar, is going to be part of the new world.

The metrics-driven thinking may have been first demonstrated by Demand Media, with its $10, $25, and $50 stories (“The newsonomics of content arbitrage“), but once opened, that Pandora’s Box won’t be closed.

Clark Gilbert is early in the game, but others are taking a parallel cost-conscious approach.

John Paton, CEO of the new, continuous-revolution Journal Register Company, breaks it down differently, but is highly cost-aware.

“We’re not looking to save money on local, professional content,” Paton told me this week. Notice the emphasis on “local” and “professional.” Like many others, Journal Register is beginning to round up hundreds of local bloggers (as Patch joins that club), who will be largely unpaid.

What Paton emphasizes, though, in his cost-of-content analysis, is the 60 percent of JRC’s content — across print and digital — that is national. He’s done a careful counting of what’s in his products, and says that while 40 percent is local (above average for dailies, he says), 60 percent is national. So Project Thunderdome, newly headed by D.C. veteran Jim Brady, has put a bullseye on that content. The notion: Lower the cost, and where possible, raise the quality of national content. That thinking is behind JRC’s recent deal with TheStreet.com, which is now providing its national business news. It’s a revenue share, with JRC gaining national revenues. In addition, says Paton, it has increased its local business content-related revenue, given both the new inventory of ad impressions made possible and the quality of TheStreet.com content. That’s a model Paton intends to extend to other non-local content.

Further, he’s taken dead aim at the cost of getting content through the mechanics of a newsroom. Saying that about half of U.S. editorial staffs are engaged in producing content for publication — not creating it — he’s focused on changing that ratio. Instead of five of ten journalists engaged in production, he’s aiming for two of ten, to be accomplished through centralization and templating of the production functions. “Then, two or three more of the ten can create content,” he says.

Both plans will, in effect, reduce the cost of content overall. And, as with Clark Gilbert’s philosophy, the intent is to invest in unique, local, proprietary content, even though it’s far more expensive.

Let’s consider one more take on story cost accounting. As CEO of Huffington Post, Betsy Morgan pioneered the unique brand of higher-end, often personality-driven aggregation that distinguished the site’s offerings. Out of that experience, and in her new role as CEO of Glenn Beck’s The Blaze site, she’s evolved her own metrics. They divide nicely into thirds.

  • One-third original, professional content, largely reported journalism.
  • One-third voice and opinion.
  • One-third aggregation, or to use the updated term, “curation,” as editors aggregate, honing off-site story selection given their understanding of their unique audiences.

Morgan tells me that “the thirds” form both an audience strategy and a cost strategy. Clearly, as the venture-backed HuffPo began its life, it watched its dollars very carefully. That meant that curation wasn’t just an audience-pleasing idea, of course, but a cost-saving one, as bloggers (at least then!) willingly forked over content in exchange for play and recognition, not money.

Going forward, the “thirds strategy” offers another twist on Clark Gilbert’s and John Paton’s (and Arianna Huffington’s) strategies. Obviously, you don’t pay for the curation part, other than for the technologies or smaller staff to handle it. You can pay for some of the voice and opinion, but there’s a hell of a lot of it you can get for free or cheap. And, once again, you concentrate your costs of content on the high end — original, professional, largely reported journalism.

The new AOL/HuffPo’s been doing that with pro hire after pro hire. Morgan herself is doing it, as recently as this week with the hiring of former Denver Post columnist David Harsanyi.

Add it all up, and it’s a new cost structure for the craft of journalism. As with all metrics, the good or bad they inspire depends on who is using them. What’s clear is that those news outfits — local, national or global — which only concentrate on paying staff, like in the old days, will find themselves out-strategized by those who take the blended approach.

Is it all about thirds? No, but it’s a good place to start.

I think of it as a pyramid. Original content — content that distinguishes news brands — is at the top, and, yes, is the most costly. At the bottom is clearly aggregation, because as Morgan points out, “[readers] can’t easily find and read what’s of interest to them.” Then, there’s the middle third or so. For regional news companies, that includes hyperlocal bloggers and subject-specific (transportation, public health, sports) experts; for national sites, it’s non-staff “contributors” of differing skills and costs. That third is quite open to innovation.

It’s a great whiteboard exercise, at least, for anyone in the news business. Pass the marker, please, and work the pyramid.

April 04 2011

18:30

“Of the web, not on it”: Emily Bell on the success of The Guardian and what she plans for the Tow Center

Before Emily Bell crossed the pond to head up the Tow Center for Digital Journalism at Columbia’s J-school, she led the Guardian’s website, helping to build it into one of the most heavily trafficked news sites in the world.

At a lunch talk at Harvard’s Shorenstein Center today, Bell shared her insights into what made the Guardian successful in its online efforts, her plans for the Tow Center — and her thoughts about the challenges facing the news industry in an increasingly networked world.

Three reasons Bell pointed to to explain the Guardian’s online success:

1. They put a high priority on technical excellence

Bell took over as the Guardian’s director of digital content in 2006. And “people actually thought, when I said that I was going off to work on the web, that I had been sacked.” At the paper, however, there was a core of people “who really understood the web,” Bell notes. And having that technical expertise didn’t just mean understanding code and web design and all the rest; it also meant understanding, almost implicitly, user behavior — and transforming the Guardian into a digital-first proposition. (It’s about being, as Bell has said before, “of the web, not on the web.”)

One of the most important shifts in mindset at the Guardian came in the form of the separation between form and content (which “now seems absolutely obvious,” Bell said, “but at the time seemed revolutionary”). And a lot of that process involved “freeing ourselves of the legacy mindset” and, in general, “getting the newsroom converged.”

2. They had a financial model that encouraged innovation

At the Guardian, which until 2008 was owned by the Scott Trust, the profit motive gave way to a broader emphasis on long-term thinking and experimentation. That led, in turn, to “a much higher tolerance for innovation” than the paper’s competitors, Bell said. The two most successful outlets in Britain, online, were the BBC and The Guardian, she noted — “neither of whom had to speak to shareholders.” Guardian staffers had greater financial leeway than most of their revenue-focused counterparts to experiment, innovate, and, importantly, fail.

3. They had a clear aim in their innovation strategy

“I’m not a massive fan of PowerPoint,” Bell confessed. But! Part of what allowed for the Guardian’s nimbleness when it came to innovation, she said, was that it “developed a really clear strategy.” The paper took the original tenets of Guardian journalism laid out by C.P. Scott and fused them, essentially, onto the networked infrastructure of the Internet. “Really, we’re about reaching as many people as possible in the world,” she said — and so the question for the Guardian’s staff became how to extend their reach using the tools of the web.

Part of that came down to a general openness to users. Bell created the Guardian’s Comment Is Free section (“which I think some of the Guardian columnists would like to see me imprisoned for!”) based on the recognition that the future will be increasingly networked, conversational, and participatory. In fact, “I stole it directly from Arianna Huffington,” she said. Through watching what Huffington was doing with her then-new news site — leveraging the unlimited space of the Internet to invite commentary from thinkers both professional and amateur — Bell figured that Huffington had it right. “This was the way that commentary would work under a collective brand for the foreseeable future.”

At Columbia

Bell’s work at the Tow Center is a continuation of that recognition — but also the product of another recognition that innovation, to some degree, requires stepping outside of the industry in order to observe it and affect its course. “As an operative in a daily news organization, it was getting harder and harder to connect” to the innovation side of journalism, Bell noted. Increasingly, “I think the space for doing that in your daily lives, as working journalists, is extremely limited — and the necessity to do it is greater than ever.”

The Tow Center, Bell said, focuses on three things: experimentation and research in the field; bringing the results of that experimentation back into the classroom; and creating a stronger digital presence for Columbia’s j-school. And “how those three things inform each other is important.” Part of the work the center will do will be to extend the purview of news innovation beyond journalism itself — to “expand the skill set” of journalism to include and embrace expertise in law, technology, the digital humanities, and the like.

“The solutions to what will make the Fourth Estate and constitute the press in the future lie largely outside the field as it’s practiced at the moment,” Bell said. After all, it’s not just news outlets that are developing ways of creating communities and connecting them — which is something that remains central to journalism’s core mission. Now everyone’s rethinking connectivity and influence. Looking to industries beyond the news, Bell noted, can help answer a key — perhaps the key — question when it comes to innovation: “what you need to support and guard a free press in the future.”

March 10 2011

15:00

The newsonomics of AOL/Patch buying Outside.in

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

There are two ways to be local, we’ve learned.

You can create local news, as newspapers, TV, and some radio stations — and more recently, tens of thousands of bloggers — have done. Or you can aggregate local, sorting through what those newspapers, TV and radio stations, and bloggers have created, picking up what you want, lifting a headline and quick summary and providing a link.

Over the years, the aggregators have often laughed — not publicly, of course — at those silly people who sink millions into creating local news, or content of any kind, while creators have joked — sometimes publicly — that some day those aggregators will have to turn out the lights, when all the content creators have gone bankrupt and out of business. Creation is hugely expensive, when all you have to do is build a better algorithm, scoop up what’s already there, organize it better than someone else, and sell advertising against it. That’s why the first decade of this century has been largely the decade of the aggregators, with the Googles, Yahoos, MSNs and AOLs, among the leaders in aggregation — and revenue.

So as much as AOL CEO Tim Armstrong talks about sparking a content revolution and creating lots of original content, in the background, he also needs to up his aggregation game, using more and more of other people’s content. That’s how I read the recent announcement that AOL’s Patch is buying Outside.in, a company that uses technology to roundup local content, dividing it into the categories of local news and local blogs — and which has partnered with newspaper companies in its four-year history. (Sadly, the memorable url construction, owing to an Indian .in domain, will probably fade into history.) It’s a small play, but one that may have bigger impact on the emergence of hyperlocal news — and local advertising/marketing dollars — in the years ahead. Let’s look at the newsonomics of the Outside.in deal, and what it tells us about the future of Patch itself and AOL’s play to get bigger audiences faster.

The deal — for a purchase price of less than $10 million — is small when compared to the investment ($14.4 million) put into Outside.in by some high-profile investors (Union Square Ventures, Marc Andreessen, John Borthwick, Esther Dyson, and CNN) and when compared to AOL’s $315 Huffington Post buy. It’s tiny, also, when compared to AOL’s spending of $606 million for 14 acquisitions since the beginning of 2010 — a number, of course, that itself pales against Google’s 48 purchases for $1.8 billion over roughly the same period.

Yet it parallels the HuffPo buy in a major way: It’s an attempt by AOL to get bigger faster. Look at AOL’s financials and it’s clear Armstrong is in a race against time. As one savvy newspaper veteran pointed out to me last week, AOL looks, ironically, a lot like a newspaper company. It has a legacy circulation product, in slow, but unmistakeable decline — its AOL-brand Internet access service — and a digital ad business (in turnaround mode) that isn’t growing fast enough to turn the company sustainably profitable in the future. So The Huffington Post not only pasted the face of Arianna atop the site, in hopes her followers will follow, but acts as the wished-for rocket fuel for overall company traffic growth over the next couple of years, especially as the election season, with its political interest, dawns once again.

Patch is part of that strategy for audience growth, drawing into AOL customers through the local pipeline.

The Outside.in deal aims to do a simple thing to support that growth: create more page views around local content, at a lower cost to AOL. Or putting it even more simply: bulking up Patch, on the cheap.

And isn’t that what critics of fast-growing Patch — more than 800 served up across the country, the fastest-growing news startup and hirer of journalists in the last several years — have said since Armstrong and Patch President Warren Webster announced its hypergrowth plan last summer. For all of you who have said, “I don’t get the business model, they’re paying too much for content,” Armstrong and Webster apparently agree with you.

Patch still needs to make its one editor/reporter per Patch pencil out, but it can do something about the costs of lassoing other content. Peruse the Patches around the country — mainly on the coasts, but with a growing representation in the Upper Midwest — and you see lots of vitality and lots of variable quality. At the top sites, you’ll find the site updated with posts and tweets every few hours, and that owes itself both to the hard-working Patch editors (10-plus hour days are still not uncommon) and their ability to pull in good stringers. The budget for those stringers actually varies by the month, as Patch balances budgets and getting its allocations right. Take a bigger Patch site — serving a city of 80,000, for instance — and it may get more than $2,500 a month in freelance budget, while smaller ones serving communities of 20,000 may only get $1,200.

What Outside.in offers Patch is a new tool to manage how much local content it offers through aggregation — rounding up news from other local sources, including local dailies and weeklies and blogs, and how much it decides to pay for directly. Add Outside.in to Patch pages and you may get the sense of a fuller news report, Patch+. Sure the plus requires readers to link off the site, but that’s the nature of the aggregation game. You get more readers to come to because you’ve created one of the largest centers of local content. If you do it right, you can be ahead of the game — and trim costs.

Let’s look at it on a pure cost basis. If Patch gets 1,000 sites up and going, which should happen this year, and it can trim what it spends on stringers by an average of $500 per site per month, that’s $6000 a year in savings per site. For the Patch network in general, that’s $6 million a year. With Outside.in costing no more than one and a half times that number, you’ve paid for the acquisition in less than two years. (Of course, there are also ongoing operating costs as Outside.in CEO and able web serial entrepreneur Mark Josephson and some other team members join Patch.)

The tweaking, of course, is both about the algorithm — tour Santa Cruz Outside.in today, and the top five news stories are from the local Patch!; where’s the local daily, the Sentinel? — and in the content model. What’s the mix of paid, fresh voices and local aggregation that pulls in, and retains, audience?

That question is, of course, what leading local newspaper sites have been trying to figure out as well. A number of newspaper partners of Outside.in itself have tried, without significant commercial success, to figure out the formula. Other sites like SeattlePI.com have used aggregation (SeattleTweets) and innovators from the Miami Herald to the Journal Register papers have signed up local bloggers, in distribution and ad-revenue-sharing programs. All of these are works-in-progress at getting the local original content creation/aggregation model right.

Patch could get it right, or righter, and become a more formidable challenger to local newspaper sites — especially as they go to paywalls of various kinds. (Although that also reopens the question of how findable and linkable their own local content is for the aggregating algorithms of Outside.in and others.) If it does get it righter, it could also become a more likely potential partner for media companies looking to cut their own local costs and reach audience. It’s all in getting that cost of content unit/ad yield per unit of content right, and no one’s yet minted the winning formula.

We can see the dilemma in one current market. Journal Register CEO John Paton (who talks about competing with Patch, here) has been working with Outside.in, to supply aggregated content for the planned fyi.Philadelphia site. He put that relationship on hold this week, and delayed the product launch, as he conjures the question: Is the new Patch/Outside.in a friend, a foe, or some in-between still to be figured out?

October 15 2010

15:00

This Week in Review: The iPad’s pay potential, Chile miner over-coverage, and another Murdoch paywall

[Every Friday, Mark Coddington sums up the week's top stories about the future of news and the debates that grew up around them. —Josh]

Advances for paid content on the iPad: We start this week with a whole bunch of data points regarding journalism and mobile devices; I’ll try to tie them together for you the best I can. Conde Nast, one of the world’s largest magazine publishers, has done the most thorough iPad research we’ve seen so far, with more than 100 hours of in-person interviews and in-app surveys with more than 5,000 respondents. Conde Nast released some of its findings this week, which included five pieces of advice for mobile advertisers that were heavy on interactivity and clear navigation. They also discovered some good news for mobile advertisers: The iPad’s early users aren’t simply the typical tech-geek early adopter set, and about four-fifths of them were happy with their experiences with Conde Nast’s apps.

MocoNews had the most detailed look at Conde Nast’s study, arguing that the fact that iPads are shared extensively means they’re not being treated as a mobile device. Users also seemed to spend much more time with the mobile versions of the magazines than the print versions, though that data’s a little cloudy. NPR has also done some research on its users via Twitter and Facebook, and the Lab’s Justin Ellis reported that they’ve found that those listeners are generally younger, hardcore listeners. Together, Facebook and Twitter account for 7 to 8 percent of NPR’s web traffic, though Facebook generates six times as much as Twitter.

There were also a few items on newspapers and the iPad: Forbes’ Jeff Bercovici reported that the New York Post will become the first newspaper without a paid website to start selling an iPad app subscription. The subscription is only sold inside the app, a strategy that The Next Web’s Martin Bryant called a psychological trick that ”makes users feel less like they’re paying for news and more like they’re ‘Just buying another app.’” The British newspaper The Financial Times said its iPad app has made about £1 million in advertising revenue since it was launched in May, but as Poynter’s Damon Kiesow noted, local papers have been slow to jump on the iPad train, with only a dozen of launching apps so far.

Meanwhile, GigaOM’s Mathew Ingram ripped most magazine iPad apps for a lack of interactivity, openness or user control, saying, “the biggest flaw for me is the total lack of acknowledgment that the device this content appears on is part of the Internet, and therefore it is possible to connect the content to other places with more information about a topic.” But some news organizations are already busy preparing for the next big thing: According to The Wall Street Journal, some national news orgs have begun developing content for Samsung’s new tablet, the Galaxy, which is scheduled to be released later this year.

Too much of a good story?: Regardless of where you were this week, the huge story was the rescue of 33 Chilean miners who had been trapped underground for more than two months. The fact that it was such an all-encompassing story is, of course, a media story in itself: TV broadcasters planned wall-to-wall coverage beforehand, and that coverage garnered massive ratings in the U.S. and elsewhere. (We followed on the web, too.) With 2,000 journalists at the site, the event became a global media spectacle the likes of which we haven’t seen in a while.

The coverage had plenty of critics, many of them upset about the excessive amount of resources devoted to a story with little long-term impact by news organizations that are making significant cuts to coverage elsewhere. The point couldn’t have been finer in the case of the BBC, which spent more than £100,000 on its rescue coverage, leading it to slash the budget for upcoming stories like the Cancun climate change meetings and Lisbon NATO summit.

The sharpest barbs belonged to NYU prof Jay Rosen and Lehigh prof Jeremy Littau. “The proportion of response to story impact is perhaps the best illustration of the insanity we seen in media business choices today,” Littau wrote, adding, “I see an industry chasing hits and page views by wasting valuable economic and human capital.” Lost Remote’s Steve Safran pointed out that the degree of coverage had much more to do with the fact that coverage could be planned than with its newsworthiness.

Rupert keeps pushing into paywalls: After his Times and Sunday Times went behind a paywall this summer, Rupert Murdoch added another newspaper to his online paid-content empire this week: The British tabloid News of the World. Access to the paper’s site will cost a pound a day or £1.99 for four weeks, and will include some web exclusives, including a new video section. PaidContent gave the new site itself a good review, saying it’s an improvement over the old one.

The business plan behind the paywall didn’t get such kind reviews. As with The Times’ paywall, News of the World’s content will be hidden from Google and other search engines, and while paidContent reported that its videos had been reposted on YouTube before the site even launched, the paper’s digital editor told Journalism.co.uk that it’s working aggressively to keep its content within the site, including calling in the lawyers if need be. The Press Gazette’s Dominic Ponsford argued that the new site formally marks Murdoch’s retreat from the web: “Without any inbound or outbound links, and invisible to Google and other search engines, the NotW, Times and Sunday Times don’t really have internet sites – but digitally delivered editions.” British journalist Kevin Anderson was a little more charitable, saying the strategy just might be an early step toward a frictionless all-app approach to digital news.

As for Murdoch’s other paywall experiment at The Times, two editors gave a recent talk (reported by Editors Weblog) that juxtaposed two interesting ideas: The editors claimed that a subscription-based website makes them more focused on the user, then touted this as an advantage of the iPad: “People consume how you want them to consume.”

News orgs’ kibosh on political expression: NPR created a bit of buzz this week when it sent a memo to employees explaining that they were not allowed to attend the upcoming rallies by comedians Jon Stewart and Stephen Colbert (unless they were covering the events), as they constitute unethical participation in a political rally. The rule forbidding journalists to participate in political rallies is an old one in newsrooms, and at least eight of the U.S.’ largest news organizations told The Huffington Post their journalists also wouldn’t be attending the rallies outside of work.

NPR senior VP Dana Davis Rehm explained in a post on its site that NPR issued the memo to clear up any confusion about whether the rallies, which are at least partly satirical in nature, were in fact political. NPR’s fresh implementation prompted a new round of criticism of the longstanding rule, especially from those skeptical of efforts at “objective” journalism: The Wrap’s Dylan Stableford called it “insane,” Northeastern j-prof Dan Kennedy said the prohibition keeps journalists from observing and learning, and CUNY j-prof Jeff Jarvis made a similar point, arguing that “NPR is forbidding its employees to be curious.”

A closer look at Denton and Huffington: In the past week, we’ve gotten long profiles of two new media magnates in a New Yorker piece on Gawker chief Nick Denton and a Forbes story on Arianna Huffington and her Huffington Post. (Huffington also gave a good Q&A to Investor’s Business Daily.) Reaction to the Denton articles was pretty subdued, but former Gawker editor Elizabeth Spiers (who wrote the Huffington piece) had some interesting thoughts about how Gawker has become part of the mainstream, though not everyone agrees whether its success is replicable.

Figures in the pieces prompted Reuters’ Felix Salmon and Forbes’ Jeff Bercovici to break down the sites’ valuation. (Salmon only looks at Gawker, though Bercovici compares the two in traffic value and in their owners’ roles.) The two networks have long been rivals, and Denton noted that thanks to a couple of big sports-related scandals, Gawker’s traffic beat the Post’s for the first time ever this week. Also this week, Huffington announced she’d pay $250,000 to send buses to Jon Stewart’s rally later this month, an idea the Wrap said some of her employees weren’t crazy about.

Reading roundup: Busy, busy week this week. We’ll see how much good stuff I can point you toward before your eyes start glazing over.

— A few follow-ups to last week’s discussion of Howard Kurtz’s move from The Washington Post to The Daily Beast: The New York Times’ David Carr wrote a lyrical column comparing writing for print and for the web, PBS MediaShift’s Mark Glaser interviewed Kurtz on Twitter, and former ESPN.com writer Dan Shanoff pointed out that the move from mainstream media to the web began in the sports world.

— An update on the debate over content farms: MediaWeek ran an article explaining why advertisers like them so much; one of those content farms, Demand Media said in an SEC filing that it plans to spend $50 million to $75 million on investments in content next year; and one hyperlocal operation accused of running on a content-farm model, AOL’s Patch, responded to its critics’ allegations.

— Two interesting discussions between The Guardian and Jeff Jarvis: Guardian editor Alan Rusbridger posted some thoughts about his concept of the Fourth Estate — the traditional press, public media, and the web’s public sphere — and Jarvis responded by calling the classification “correct but temporary.” The Guardian’s Roy Greenslade also wrote about his concern for the news/advertising divide as journalists become entrepreneurs, and Jarvis, an entrepreneurial journalism advocate, defended his cause.

— Three other good reads before we’re done:

GigaOM’s Mathew Ingram told newspapers it’s better to join Groupon than to fight it.

Newspaper analyst Alan Mutter laid out French research that illuminates just how far digital natives’ values are from those of the newspaper industry — and what a hurdle those newspapers have in reaching those consumers.

Scott Rosenberg looked at the closed systems encroaching on the web and asked a thought-provoking question: Is the openness that has defined the web destined to be just a parenthesis in a longer history of control? It’s a big question and, as Rosenberg reminds us, a critical one for the future of news.

September 30 2010

17:00

The Newsonomics of journalistic star power

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Maybe it’s a trend, or maybe it’s a bubble, but Jim Romenesko’s blog is chockablock with high-level journalist movement. The Newsweek Six are on the auction block, sought by eager bidders, as Time Warner solidifies its relationship with Fareed Zakaria, making him a wholly owned, cross-platform phenomenon, and Howard Fineman gets tapped on the shoulder by The Huffington Post, soon after it hired away The New York Times’ Peter Goodman.

Daniel Gross jumps from his long-time Slate home to Yahoo Finance. The National Journal makes acquisition after acquisition, this week reeling in Dave Beard, the well-respected editor of Boston.com, where he joins numerous other veterans (AP’s Ron Fournier, Newsweek’s Michael Hirsh, The Atlantic’s Marc Ambinder, Fox’s Major Garrett, among them) who’ve recently made a switch. After an apparent flirtation with AOL, Kara Swisher and Walt Mossberg stay safely in the News Corp bosom, while AOL spends its bonus dough on TechCrunch, buying a brand and an established news operation.

Other well known journalists are also suddenly fielding calls of interest — and often moving on to new adventures. Bloomberg’s been hiring pedigreed journalists by the dozens, for Bloomberg Government and other initiatives. Patch is snatching many of its regional editors from daily newspaper ranks.

What we’re seeing is a market develop. This is market that newly prizes talent, but a certain kind of talent. Most of the hiring is at the minor star level, though the lumens emitted vary. How do you measure — critical to digital success — the light?

First off, the hiring companies believe they know sustainable models of building businesses on higher-quality content. That may seem basic, but when we look at the much of the newspaper, broadcast, and consumer magazine worlds, that belief is flagging. They look at well salaried, professional staffs and see high “cost structures,” which are harder to justify, given current levels of advertising and the lack of successful digital revenue models.

We know that Yahoo and AOL, increasingly competitive with each other, believe they’ve found a working formula to make good content pay profitably. Tim Armstrong, AOL’s CEO, talks about “sparking a content revolution.” His formula, and Yahoo’s, is fairly straightforward, and borrows its commandments from the Demand Media bible. It’s all about the efficient ad monetization of content, with analytics — know the nature of the content, target the reader and align the advertiser — that seem to grow better week by week (see The Newsonomics of content arbitrage).

(AOL, ironically, is milking its online access business — yes, lots of people still think of AOL and Internet service as the same thing — drawing 43 percent of its revenue from it. That’s similar to newspapers milking the print business for as long as possible, as they can make the inevitable digital transition. By that comparison, AOL’s lifeline is much shorter, with a 25-percent 2Q drop in customers paying for that access, while most newspaper companies’ circulation revenue down only in low single digits.)

The newsonomics of the star hires is intriguing. Think of these “star” hires as individual SKUs, “products” whose value can be estimated against the customers they bring in the door. Those conversion customer metrics are evolving. Counting pageviews is the simplest way. Take those views at whatever (premium?) rate you can sell them, and you’ve got a first number. The intangibles are how many new unique visitors the Zakarias, Finemans, and Grosses bring with them from their old haunts. How many of those new customers become regular customers of the outlet? That gets you to some annual and/or lifetime value metrics. As metrics are collected and tested, we’ll see some more science brought to what is now a star-search art form.

There certainly are other intangibles. What is Yahoo News exactly? What is HuffPo? What is AOL? As they define themselves as legitimate news companies, the new stars bring cred — and legitimacy. In addition, they are magnets to other, lesser-known talent, signaling, “it’s okay to come here.” There’s economic value in that, too.

Notably, few established legacy brands are hiring new top-end talent; Time’s Zakaria hire is a smart, though unusual one, enabled by the Newsweek uncertainty and Time/CNN linkage. For the most part, legacy news companies’ growth scenarios are borrowed, curiously, from those now hiring those stars: multiplying the amount of content available under their brands, harnessing amateur and lower-cost stuff from local bloggers, licensing from Demand Media and aggregating content through FWIX, Outside.in, and OneSpot. They’re the ones paying heed, at least indirectly, to Wikipedia’s Jimmy Wales’ observation that hiring six-figure columnists in this time is silly: “The best of the political bloggers are easily the equal of the opinion columnists at the New York Times. I don’t see the added value there and question whether a newspaper should be paying large sums of money for that any more.”

The hirings at the National Journal and Bloomberg point to a different kind of business model. Those companies have found niche models involving significant reader and/or enterprise payment, and now are building out, and around, those businesses. They, too, believe they can make a new business out of superior content.

It’s complicated, and there are more than two phenomena happening here. Yes, some players that have built successful enterprises — think Yahoo, AOL, Huffington Post — on non-professional staff content (through aggregation, pro-am sites, and more) are now adding the pros at the top, to reinforce brands and put faces on them. At the same the high-cost, pro-based enterprises are going the other way.

It’s not an equilibrium, nor will these models meet in some neat middle, but there’s some sense of coming at a similar solution from two ends of the spectrum. It’s a blend of old and new, expensive and cheap, and no one yet knows the best formula.

Arianna Huffington explains it as a maturation, and indicates the hiring of pros was part of the original Huffington Post plan: “From the day we launched, it was our belief that the mission of The Huffington Post should be to bring together the best of the old and the best of the new. Bringing in the best of the old involved more money than we had when we launched. But now that our website is growing, we’re able to bring in the best of the old.”

The likely result of these moves? By 2015, news companies will pay top dollar, and pound, euro and yen, for top-end talent, and they’ll pay as little as possible for good-enough newsy content that fills many topical and local niches. Over the next several years, the most successful media brands will have mastered better the economics of pro-am journalism.

Infrared image of a star cloud courtesy of NASA.

May 19 2010

14:00

Huffington talks convergence, and “monetizeable free”

We wrote yesterday about The Washington Post taking a page from The Huffington Post in building blog networks on the content-for-exposure-not-cash model. But the borrowing isn’t all going in one direction. In this conversation with Texas Tribune boss Evan Smith, HuffPo founder Arianna Huffington says she sees a broader narrative of convergence, where “legacy media” (her term) and the startups are moving in similar directions. The Washington Post might be looking to leverage free content, but she’s hired reporters and launched a non-profit investigative unit — decisions that look more traditional than new.

Smith interviewed Huffington in honor of the political site’s fifth anniversary last week. The site recently hit 13 million monthly unique visitors, pushing it ahead of The Washington Post and USA Today and within shouting distance of The New York Times. Here’s what Huffington had to say about changes in media, particularly the difference between mainstream media and bloggers in the last five years:

Well, first of all, I think what’s happening now is more of a convergence. When we launched The Huffington Post, we were worlds apart. There was the legacy media that were very, very skeptical about blogging, or the future of online media. And there were the startups like The Huffington Post. Now The New York Times is doing a lot online. They’re doing a lot of great things online. And we are hiring more and more reporters. And we have launched The Huffington Post Investigative Fund, which is a not-for-profit operation that does many of the long-form, more traditional journalistic investigative pieces. So I think we’re moving toward a hybrid model, where those who recognize we are living in a brave new world — it’s about the link economy, it’s not about paywalls — are going to actually survive and thrive. And those of us who recognize that the traditional tenets of journalism — fairness, accuracy, fact checking — need to prevail and be supplemented by all the new technical tools and the new citizen engagement are also going to survive and thrive.

The Huffington Post has a clear interest in making sure the link economy thrives and paywalls aren’t erected. Aside from its countless bloggers, the biggest draw of her site is the aggregation the site’s editors do on each vertical, which have expanded from a single front page to more than 20.

Smith also quizzed Huffington on keeping HuffPo a free site. She was quick to point out that “the culture of free” is “monetizable free.” The site is expected to become profitable this year.

We are, as I said, paying all our reporters and all our editors. People who want to write, in the same way you would write an op-ed for The New York Times or The Washington Post, do it whenever they want. They are not our employees. They have no obligation to us. We have no expectations. It’s they who want to post, because they want to disseminate what they’re thinking. Whether it’s on politics or food, we have thousands of requests to post, thousands more than we have the opportunity and ability to process — beyond the 6,000 bloggers who have a password and can post whenever they want. And then our editors decide what they’re going to feature on the home section or the other sections…

We pay them in visibility. We pay them in that we provide the infrastructure, the community, the civil environment into which their work appears. The traffic. And then also the fact that many in the media have the site bookmarked means that they’re going to be seen, not just by many people, but many of the people they may want to reach to go on TV, to get a book contract. We love it. We all love it on the site when we get a call from an agent saying “Can you get us in touch with so-and-so blogger?” In many ways, it becomes like an addition platform.

April 13 2010

16:00

“The 24/7 News Cycle”: David Carr, Arianna Huffington, and Mark Russell debate the future at ASNE

Earlier this morning, David Carr, Arianna Huffington, and the Orlando Sentinel’s Mark Russell gathered to discuss “The 24/7 News Cycle: New Opportunities, New Pressures.” The panel had, surprisingly, a more elegiac tone at the outset than some of the previous events at this week’s “NewsNow Ideas Summit“; near the start of the conversation, Carr mentioned starting as The New York Times’ media columnist during a time when mass layoffs at papers and other media organizations were already the norm. “For a while I was thinking, ‘Does this end with me typing my own name into a sentence about layoffs?’” he said.

Now, though, at least according to the panel, things are turning around. Despite the recognition of context, optimism — tempered by pragmatism — was the talk’s overall sensibility. “I think we’re getting to the good part,” Carr said. “That’s what it feels like to me.”

Below, three (by now familiar) ideas that emerged, again and again, during the conversation:

1. The core need for context in addition to, and as part of, news narrative.

“We need to go back to getting stories,” said Huffington. But we need, she continued, to tell stories in a new way — to bolster them with background information, smart framing, and, overall, context. “How do we do impact journalism — especially at a time when so many institutions are crumbling?” Huffington asked. Which is also to say: “How do we do journalism in a way that is transformational?”

One answer to that question, she said, is to leverage the expertise of editors. Even in the aggregative work The Huffington Post is engaged in, Huffington pointed out, “the editorial function is paramount.” If a story is “surging” — i.e., getting heavy traffic and pass-around — it’s up to an editor to decide whether to increase its reach and impact, she said. Is the story, ultimately, “worthwhile”?

Context also demands stepping back from the tumult and taking time to process information as well as produce it, Carr pointed out. “I think because we’re so busy pushing media out, that it makes us dumber and dumber,” he said. (Later, he added: “This thing about iterating, iterating, iterating — great. But every once in a while, pick up the gun and shoot it.”)

“Editors are always saying, ‘Do more with less,’” Carr said. “We know that’s baloney. We know that’s not true.” He echoed a comment Mark Russell had made earlier: Know your strengths, he said, and focus on those. “We have a guy named Brian Stelter, who every time he moves his elbow, media pops out,” Carr pointed out. But Stelter is a digital native, Carr said; not everyone can — or should — be like him. Pick your battles.

2. The need for strategic use of new technologies.

“The cloud enriches what we do in ways that we don’t even see — because it happens slowly,” Carr said. And it opens up the possibilities for journalistic creation. “There’s this cereal box of things I could be doing every single day,” Carr pointed out. But, then again, “just because you can do it doesn’t mean you should do it.” Again, be selective.

And that’s a rule for preserving not just journalists’ sanity, but also their journalism itself. “It’s not how many times you tweet,” Huffington said; rather, “it’s how effectively we can use the new media and the new technologies.” And it’s about taking advantage of the new connectivity that the web allows to improve journalistic storytelling. “Technology has allowed millions of people to express themselves as they’ve never been able to before, she said — to the extent that “self-expression is the new entertainment.” And leveraging that expressive explosion is to everyone’s benefit.

(As to the payment question: People ask why people edit Wikipedia for no money, Huffington said. People ask why people tweet for no money. “But nobody asks, ‘why are they watching seven hours of bad TV for no money?’”)

3. The need for respecting readers and their desires for the news.

The patriarchal days of journalism are over, the panelists suggested; today, news is about determining what readers want — and not only giving it to them, but giving it to them where they are. Social media aren’t merely valuable as crowdsourcing mechanisms; they’re valuable as distribution platforms. “That’s the stage you have to be in because that’s what the users expect,” Russell said. Ultimately, “we have to be in the spaces they’re in.”

4. The need for collaboration.

We’re in a time that finds discrepant news approaches colliding with each other. “Arianna’s marching toward us in terms of some things that she’s up to; and we’re marching up toward her,” Carr said. It’s “insurgent warfare” — “and we’re at a disadvantage because we have all of these legacy costs and systems,” he pointed out of the Times. “The frictional stuff that’s going on is breathtaking to behold.”

One thing to remember, though: When news outlets become casualties of our transforming news system, their loss “is not collateral damage,” Carr said; it’s a real reduction in our ability to cover communities. Which makes collaborations — which are, among other things, hedges against news vacuums — increasingly valuable.

A lot of these hybrid models — “which I thought were, frankly, baloney when they first launched,” Carr said — are now playing an indispensable role.

March 03 2010

15:00

Huffington Post outsources section to online fundraising organization

In October, The Huffington Post launched a new section with an unusual goal: turning an audience of passive readers into activists for good causes. The section’s underlying business model is novel, too: All of its content is outsourced to an outside company, a for-profit firm that has nonprofits for clients.

In exchange for that content, HuffPo shares the advertising and sponsorship revenue the section generates with the outside company, Causecast. And Causecast gets a platform to promote its services and the nonprofits it chooses to highlight, some of which are its partner organizations.

The arrangement emerges at the same time news organizations are struggling to make display advertising alone a viable business model. The HuffPo-Causecast arrangement, in conjunction with ads, could be an example of the kind of hybrid solution publishers are struggling to find. However, by blurring the line between advertising and content, it also raises questions about conflicts of interest and editorial responsibility.

A platform to encourage giving

I first noticed the section — Impact — a few months ago, with its hot-pink branding and tagline “in partnership with Causecast.” There’s no further explanation of the relationship between the two organizations on the page; you have to browse away to Causecast’s site to learn that it provides nonprofits with online and mobile fundraising tools. Causecast’s site uses social networking to encourage users to become fans of nonprofits and then donate to them, using a single login and donation platform. About 60 nonprofits, ranging from local homeless shelters to national organizations like Planned Parenthood, are listed as affiliates. Causecast offers nonprofits a menu of services, some of them free, like getting a fan page on Causecast’s site, and others for a price, including technical support for mobile device fundraising. Causecast declined to say how many nonprofits are paying clients.

When I talked to the Impact section’s editor, Jonathan Daniel Harris, I was surprised to learn that — despite having a bio and byline like other Huffington Post editors — he is not a HuffPo employee. He is paid by Causecast and works out of their Santa Monica offices. As part of the arrangement with the Huffington Post, Harris oversees two other writers, who are also Causecast employees, in producing the site’s content, which includes short original stories and aggregation from around the web. The stories and curated links are generally about a social cause, or person in need; The earthquake in Haiti, for example, dominated the section for weeks this winter. But other causes, like malaria or homelessness — many of the same problems Causecast’s partner nonprofits aim to solve — are also featured.

At the end of some of the original posts, which look like other Huffington Post content, readers get a chance to donate money to a nonprofit. Often, the nonprofit highlighted is a Causecast-affiliated organization and the link will take the user to a Causecast-facilitated donation page. Causecast says it does not take a cut from any of the donations. The money is filtered through Causecast’s nonprofit arm and the money — about $200,000 so far — goes directly to the organizations.

When I asked Brian Sirgutz, Causecast’s president, if a Causecast client could pay for a link or a story on the Impact page, a spokeswoman for the organization responded in an email that they could not. I also asked if Causecast clients get any priority in the editorial process when determining what nonprofits to feature. I was told “no.”

Multilayered relationships

But that doesn’t mean Causecast isn’t writing about or linking to affiliated organizations. Here’s an example: On Jan. 31, Harris wrote a 76-word post titled, “Malaria Is The Cause of 2010, Declares Matthew Bishop and Malaria No More.” The quick post notes that the nonprofit group Malaria No More expects the World Cup in South Africa to draw attention to the disease. Underneath the post, a box features a link to donate money to Malaria No More, using Causecast’s donation tool. Harris doesn’t mention in the post that Malaria No More is a member organization of his employer, or that Causecast ran Malaria No More’s mobile fundraising campaign. Causecast lists the campaign as a case study for its text2give services.

Causecast has also linked to and promoted AARP’s project Create the Good. AARP contracted with Causecast to develop the concept and execute the site, which helps would-be volunteers find places in their community to pitch in. Create the Good was an early advertiser on the Impact section, noted by Arianna Huffington in her post announcing the new site. (Huffington didn’t note a relationship between Create the Good and Causecast in her post.) Including Huffington’s post, the Impact section has tagged seven posts with a “Create the Good” tag. None of the posts mention that Causecast was paid to create the site.

The Impact site has also run fundraising events. In the 12 days leading up to Christmas, the site ran a series of stories (about 1,000 words each) “highlighting Americans who have persevered to overcome incredible challenges and the nonprofits that helped change their lives.” I looked up some of the nonprofits readers were encouraged to support. Most are listed as partner organizations on Causecast’s website; some were not. Neither distinction was noted in the stories.

The same series also ran a disclaimer at the end of some of the profiles unlike anything I’ve seen in journalism: “Causecast Corporation and The Huffington Post make no representations or warranties as to the legitimacy of this person’s story, need for assistance, or the amount of any medical or other bills, if any, owed by this individual.” The Huffington Post and Causecast gave me statements noting they run the disclaimer when they ask readers to donate to an individual, rather than a vetted group with IRS nonprofit status.

I asked Harris about the editorial relationship between the two groups. He explained that the Huffington Post “pretty much gave up complete control of a section to another company.” But, he noted, he’s in regular touch with senior editors: “It’s not like we can do whatever we want.”

A joint arrangement

In an email response to questions, the Huffington Post explained that Causecast’s values are in alignment with its own and that the editorial process is similar to other sections on the site. “Impact editors receive this guidance jointly from senior editors at both HuffPost and Causecast. There is an ongoing back and forth between the HuffPost and Causecast teams.”

Sirgutz described the relationship as a service: Causecast takes care of a project that Huffington Post wants, but would not otherwise invest in. “This market is not exactly something where a big media company is going to say, ‘we want to spend resources and time and money to be able to develop this type of content or service for our readership,’ because it isn’t going to exactly blow off the charts on the profit margins or traffic,” he told me. “So, what we’re able to do was to bring our expertise, because this was our field, we were able to provide that service to the Huffington Post and come up with an arrangement where they don’t have to spend any money to cover this type of content or on providing the direct ability for their readership to take action.”

Both Harris and Sirgutz are hopeful about the future of the partnership with Huffington Post, and for these kind of partnerships more broadly. Both pointed to additional corporate sponsorships as an added revenue stream. AARP, for instance, sponsored the Impact site for six weeks, buying up all ads on the page. I asked Harris how he thought the project’s gone and where he thinks it’s headed. “It’s been successful so far,” he said, “and if it can continue to grow and sponsors are interested in paying us, that is kind of proof of concept right there.”

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