Many newspaper bosses still think traditional journalism represents the unique strength that will, somehow, secure their digital future. But it’s all about people, and digital-only operators are increasingly cherry-picking the best journalistic talent.
Pew Research says that America’s eight leading digital-only news organisations are becoming increasingly significant employers of media talent and now account for a total of 2,500 people.
The prospects of digital news pulling away from traditional groups is highlighted not just by the increasingly content-focused digital powerhouses of Facebook, Google, LinkedIn, and Twitter – and media specialists like Huffington Post, Business Insider, Mashable, and Bleacher Report. The newer – and perhaps more significant – threats are coming from digital businesses led by journalists who have defected from traditional media.
This is my pick of 8 journalists who are starting to beat traditional media at its own game.
And the leader is…
1. Shane Smith: Vice News
Almost exactly 20 years ago, Canadian-born Shane Smith launched Vice as a counter-culture free magazine, originally called Voice of Montreal. He quickly moved to create news content and social commentary, and stepped up to reporting from North Korea, Iran and Russia, initially for his 2006 online TV series Vice Guide to Travel. The sideways, devil-may-care video commentary was followed by spiky political coverage from Afghanistan, India and Spain in an Emmy-winning series for US cable channel HBO.
Now based in Williamsburg, Brooklyn, Vice Media extended from print to video with the 2006 launch of VBS.tv on YouTube. The push into serious video journalism was marked by “In Saddam’s Shadow: Baghdad 10 Years After the Invasion”, but always alongside frippery like “The Biggest Ass in Brazil” and “Donkey Sex: The Most Bizarre Tradition”.
Vice now spans websites, TV shows, a film production house, advertising agency and record label – and employs some 1,100 people in 36 countries. Its YouTube account has 5 million subscribers, 150 million monthly uniques, and its videos have been viewed more than 1 billion times. YouTube is packed with Vice videos that have been viewed 1million times or more. And its eponymous print magazine is still going strong, with a free worldwide circulation of 1.2million copies.
Quite simply, Vice Media has a uniquely global following of the under 30s.
The big surprise, though, is the exploding financial success of this hippie-meets-hipster media empire. Revenues are forecast to hit $500m in 2014 – almost trebled in the past two years, with a further doubling to $1bn expected by 2016. And it’s highly profitable. This year, it will make some $125m EBIT profit and margins are expected to rise to 40-50% – so perhaps $450m of profit in 2016. (By way of comparison, BuzzFeed’s 2014 revenue is expected to reach $125m – 25% of Vice Media).
Vice is riding the phenomenal growth of online video and is now starting to pile up advertising and sponsorship revenues – because these highly-prized young audiences are online and, increasingly, not watching TV. UK figures make the point: 75% of adults get their news from TV and watch an average of 115 hours of coverage per year, but 16-24 year-olds watch just 27 hours of TV news per year year. Media analyst Claire Enders recently noted that, over the last 18 months, there had been a 22% fall in TV viewing among the UK’s 4-15 year-olds and a 15% drop among 16-34 year-olds. These trends are equally evident across most developed economies.
It wasn’t like that when VBS.tv was launched. But early collaboration with Viacom brought real professionalism as Vice’s break-the-rules reporters shopped for black market weapons in Bulgaria and hunted for mutated animals at Chernobyl. The video reports were always eye-catching and thought-provoking, and early viewers knew they had stumbled across something special.
The services were expanded to cover hot youth topics including music, fashion, food, technology and travel. It now plans to produce more than 2,000 hours of video content in 2014. Even before the expected growth in advertising revenues, Vice profits have been driven by its licensing-out of video content to TV stations around the world. It’s a strategy that neatly exploits the rising demand for original content at the same time as production budgets almost everywhere are being slashed.
Vice has a news programme in Italy largely comprising content from its HBO series, coupled with original Italian reporting, and it is planning similar shows across Europe. The licensing fees from these programmes and from cable operators in Europe, the US and Asia have been the main reason why Vice earned more revenues in the first quarter of 2014 than it did during the whole of 2013.
Smith says: ”We used to believe much more in owned and operated content. We felt we had to own every eyeball, but now it doesn’t matter. As long as you’re growing an audience that’s branded, and you’re making money, then who the f— cares? It’s actually very restricting to keep everything on your own platform.” And there’s the snowballing revenues from sponsored content which includes a multi-year, multi-million-dollar deal with Intel to build The Creator’s Project, described as a premier worldwide arts and culture channel which includes daily video and editorial content, a YouTube channel, artwork commissions and cultural events.
But the biggest leap in the company’s fame (and potential fortune) really came in December 2013 with the launch of the Vice News “global news channel”. This almost coincided with the fresh outbreak of hostilities in the Middle East whose impact on Vice has been compared with that on CNN at the start of the First Gulf War, when only the Time Warner-owned network had reporters in Baghdad.
As if to emphasise the dramatic change in media in the intervening 24 years, the latest Iraq war has been characterised by astonishing internet footage behind enemy lines by a Vice reporters embedded with the ISIS terror group. It has left the rest of the West’s media scrambling to catch up. Or to do what broadcasters like the BBC have done – pay to replay Vice’s own footage. And the five-part series on ISIS has been viewed more than 10 million times on YouTube, complete with ads.
Flat-footed broadcast journalists have been heard to snipe at Vice’s supposed hand-in-glove relationship with the ISIS terrorists. But Smith silenced them by saying: “We just asked”. The video reports, which have been criticised for some propaganda elements, include shocking and powerful insights into ISIS people at work and play. Although Vice might have shaken up the traditional media coverage of war, it crucially has also served it up to a young audience via smartphones and tablets.
Vice News describes itself as “an international news organisation created by, and for, a connected generation”. It tells followers it is: “Bringing you an unvarnished look at some of the most important events of our time and shining a light on under-reported stories…we get to the heart of the matter with reporters who call it like they see it.” Vice’s European head of news said at this summer’s Edinburgh International Television Festival: “Vice News isn’t TV news. We are building it out of an already engaged online audience in their 20s. We are in a different space. Response to people moving away from the old fashioned forms of TV news, whether that’s news bulletins or 24-hour [rolling news] TV. We have responded to that.”
The New York Times has noted that Vice eschewed the “voice of God” approach of network correspondents to bring the viewer in closer. And the approach soon got the attention of the media barons.
After months of courtship by media groups large and small, Vice this month raised a whopping $500m from the sale of a combined 20% of its shares to cable TV group A&E Networks (owned by Disney and Hearst) and to Technology Crossover Ventures, which was an early investor in Netflix, Spotify, and Facebook. The A&E investment comes with a commitment to provide an outlet for Vice on its cable channels which include A&E, History and Lifetime.
The two deals, therefore, value Vice Media at $2.5bn – almost doubled in the year since early admirer Rupert Murdoch’s 21st Century Fox bought a 5% share. And it’s three-times the valuation of BuzzFeed in its own recent fund-raising. The Vice News channel itself is only 10 months’ old but is already troubling CNN and Sky News. It’s just a few years since Murdoch tweeted: “Who’s heard of Vice Media? Wild, interesting effort to interest millennials who don’t read or watch established media. Global success.”
His son James Murdoch even joined the Vice Media board last year, leading some to believe that Shane Smith’s ambitions to launch a global 24-hour channel might just become a collaboration with Sky/ Fox. And, while Vice may not seem like a direct rival for newspapers’ digital services, its mastery of video news may just be shutting down some of their future options.
Two years ago, Smith said he was building “the next CNN”. The prediction had followed earlier claims that it was set to become “the next MTV”. Now, Vice says it is becoming ”the largest network for young people in the world”. The big guys have stopped laughing.
The hard-talking, T-shirt-wearing Canadian founder enjoys being in front of the camera but doesn’t care whether people like him or not. He is starting to refer to Vice as “the Time Warner of the streets”, which preserves its licence to shock audiences. For all its powerful news and documentary coverage, Vice continues to promote the weird, wonderful and wicked. It seems curiously like the way that BuzzFeed is also recruiting serious heavyweight journalists but won’t let go of the “10 fattest dogs in the world”.
But Vice is proud of its sensationalism and responds to critics with a quote from a longtime editor of The Economist, no less, who apparently had two internal rules: “Simplify, then exaggerate. ” Smith adds: “A lot of very good journalism involves mechanisms to get you to pay attention. We want you to love us or hate us, but not be indifferent.”
This is a company that is growing up fast, now with 4,000 contributors, lots of experienced reporters and producers, and well-equipped teams who are skilled, daring and different. The evidence includes brilliant exclusives from the Guantanamo Bay detention centre and, last month, from time spent patiently with the children of riot-hit Ferguson, in Missouri. And it recently scooped all media with a copy of ship’s manifest that revealed details of a $38 million Chinese arms shipment to South Sudan.
Vice’s ‘guerrilla journalism’ is, to say the least, succeeding in getting a new audience interested in world affairs. For traditional media companies, the most interesting thing may be less its daring journalistic techniques than its ability to make money from digital news. But Smith knows his market: “News audiences on TV are skewing at 50 or older. No one else is creating journalism for young people…Young people, who are the majority of our audience, are angry, disenfranchised, and they don’t like or trust mainstream media outlets. They’re leaving TV in droves, but music and news are the two things that the younger generation in every country are excited about and interested in.”
Now, Vice Media is becoming mainstream, hence the $2.5bn valuation. One key to the recent investments is that the company has managed to keep its independence, ahead of dramatic change in the international news business. As it increasingly pulls audiences away from traditional news media, the insurgent itself will surely face strong new competition. But Vice (and other online operators) will rapidly build revenues by chipping ever larger chunks off those huge advertising and sponsorship budgets.
If you doubt what’s coming, just consider one name that escaped most of the recent Vice media coverage: WPP. The world’s largest advertising group actually became a minority investor in Vice three years ago in “a partnership” which, WPP CEO Sir Martin Sorrell said, would ”further develop our content capabilities, particularly in new media and amongst the youth consumer segments. Vice has been extremely successful in developing and repositioning major brands in these areas.” In April, Sorrell said that Vice was “flavour of the month” and encouraged his Group M advertising-booking giant to “adapt” to demand for online content. Sorrell sits alongside MTV founder (and former Viacom boss) Tom Freston, and super agent Ari Emmanuel (of William Morris Endeavour) as a club of powerful advisers who have been behind Shane Smith for the past three years. Who would bet against them?
What’s special about Vice? It’s already a global news player and is highly profitable. Vice shows that news can make money and, more to the point, owns the 18-34 year old demographic that advertisers will pay handsomely to reach. It has won huge audiences with its new-wave reporting. But Shane Smith takes seriously the age-old journalistic principles of storytelling and getting the answers to key news questions. He’s setting the standard for the accelerating online-broadcast fusion of global news. Almost from nowhere, Vice News has become the one to beat.
UPDATE: 23 June 2016: (from The Guardian):
Vice is to launch TV and digital services in more than 50 countries, as the youth-focused media company continues to expand aggressively. It has struck a range of deals with international media partners to bring TV, mobile and digital services to regions including the Middle East, Africa, India and south-east Asia. Vice will also extend its services in existing markets including Australia, New Zealand and Canada.
The deals will see a expansion of Vice’s empire – which include the Viceland TV channel, Vice News and lifestyle, culture and entertainment programming – from about 30 countries to more than 80.
Overall, the company’s new Viceland TV channel will be available in 44 countries. Vice co-founder and chief executive Shane Smith said at the Cannes Lions advertising festival: “We will… be launching in 44 countries… making Viceland the fastest growing television network in history.” The mix of new deals range from launching “three screens” in new markets – mobile, a 24-hour TV channel and digital services – to just one, or a combination, of each. In March, Vice announced it was to launch a TV channel on Sky in the UK and Ireland, its first channel launch in Europe. The deal was the first of 12 channels Vice pledged to launch across Europe over an 18-month period.
Vice also recently said it will launch in Russia and half-a-dozen eastern European countries. (www.theguardian.com)
2. Leo Laporte: TWiT TV
If you want another angle on the future of TV, go 35 miles north of San Francisco to the suburban wine-making town of Petaluma. Or just go to the web. There, you will find the TWiT (“the week in technology”) ‘netcasting network’, begun 10 years ago as a series of podcasts by longtime tech journalist and Emmy-winning broadcaster, Leo Laporte. He dropped out of Yale in the final year of a Chinese history degree and turned to radio. He began specialising in talks on technology in 1990 and then turned to Tech TV. He stumbled into podcasting, even now an overlooked corner of the media world, where more than 150,000 regular shows are dispensed by the iTunes store. In the US, almost 35% of the population listen to podcasts, which became Laporte’s low-cost route to media ownership.
His webcasting empire looks like the future of so much narrowcast broadcasting. It has morphed from a podcast about technology into a round-the-clock, live-streaming online “network,” produced at a fraction of the cost of a cable channel. Within a few years, he was producing 30 hours of podcasts per week, with his flagship This Week in Tech notching up some 250,000 of downloads.
Now, the TWiT network’s 20 specialist shows, including This Week in Google, iPad Today, All About Android, and Windows Weekly, are downloaded more than 5million times a month. TWiT streams all-day video that captures Laporte’s podcasting and a weekend show on computers, ‘The Tech Guy”, which adds 500,000 more listeners through 140 radio stations across the US. Crucially, it has been able to monetise its highly lucrative, specialized audience through sponsorship and advertising.
It had all (seemingly) been nicely amateur with Laporte hosting TWiT from his old Californian wooden cottage. But there’s nothing make-shift about the audience – and the profits. Laporte started out by eschewing advertising and asked listeners instead for contributions of up to $10 a month. But, as his audience grew, so did his ambitions. He took on a business partner and started selling advertising.
Today, companies as diverse as Ford, Visa, Microsoft, and AOL, are paying a premium price (of some $80 per 1,000 viewers/listeners compared with the US average CPM of $15) to reach Laporte’s loyal, tech-savvy audience. His revenue has doubled for each of the past five years. As one of the first people to tap into the business potential of podcasting, he has been able to market a niche audience that advertisers love, 30% of it outside the US. And it’s still growing fast. In 2013, his $7m revenues might have produced EBIT profits of some $2m.
In 2011, he established a purpose-built studio (called the Brick House, to distinguish it from his cottage down the road) and declared his goal of becoming “a 24-hour technology news network, the CNN of technology”. For broadcasters, including the UK’s regulators who have been looking closely at the low-cost Laporte operation, TWiT looks increasingly like the future of TV – or quite a lot of it.
Laporte told his ‘aw shucks’ story to a TED conference in Dubai a few years ago, where he spoke of ”a little podcast network which I have built into an internet television and radio station in this little cottage in the middle of nowhere in Northern California. Now, we’ve decided to go with our 5million audience and develop it into a full broadcasting business, the CNN of tech.” If you doubt he has achieved that, look at the huge traffic volumes on TWiT as Apple’s Tim Cook unveiled his latest products this week.
TV professionals the world over have long talked about the way that their medium will weave itself through the web; and the latest internet-connected televisions point the way to computer integration straddling home screens and mobile devices. TV producers talk a good game of their future security based not on broadcast channels but on-demand content, pausing blissfully to say that consumers will pay for good content. But the TWiT network tells us something else about how TV might develop – and how low-cost competitors might multiply.
What’s special about TWiT? The technology is relatively simple, highly-effective and brings together TV, the internet, podcasts and social media. The operations are, by TV standards, stunningly low-cost. Leo Laporte has been making a profit since he won 2,000 regular viewers in his first year, and is now probably making profits of at least $2m. This is dynamic, open-access TV where viewers Skype in and engage in dialogue online and on-screen. In the age of Twitter and user worries about the “commercialism” of Facebook, TV channels (sort of) operated by their viewers could become huge. TWiT offers its viewers not just friendliness but also authenticity: controversial views are challenged and corrected in real-time in ways which would appeal to many consumers reared on the untouchability of mass media. This new generation TV could produce powerful media channels in many special interest and business sectors.
3. Nick Denton: Gawker Media
Nick Denton is the former Financial Times journalist who wrote a big-selling 1990s book on the spectacular collapse of the UK aristo-owned Barings Bank, and then founded a London business-tech social network called First Tuesday. Then, in 2002, he started the gadget site Gizmodo. A year later came Gawker, a New York media and gossip blog.
This is the astonishing story of a heavyweight financial journalist who has made his fortune from tabloid-style scandal and gossip. Ahead of Twitter, he helped burst what had become a celebrity bubble for the world’s newspapers and magazines.
Denton quickly expanded into a network of subject-specific blogs across sports, gaming and science fiction. Gawker Media, whose monthly uniques averaged 105m in 2013, is one of the most popular blog networks and one of the most valuable. Gizmodo has some 6m monthly uniques.
Although this privately-owned business is cagey about its financial performance, it is believed to have revenues of some $50m (10% from click-through e-commerce) with profits of perhaps $25m. It employs 130 people, 75% fewer than Huffington Post and 25% fewer than BuzzFeed.
Although Gawker’s early reputation was built on celebrity gossip, it also was responsible for some major exclusives including former US vice presidential candidate Sarah Palin’s hacked emails, stolen iPhone prototypes, and the resignation of a scandal-hit New York congressman. But, for all the scratchy journalism, Denton has always been a web media leader, pushing for a switch from measuring page views to the monthly uniques that are now widely recognised as the most valued measure of blog readership. Such campaigning has made him a real power broker in New York media and technology. His various comments have implied he might at some point form an alliance with BuzzFeed or The Guardian or News Corp.
Gawker has ruined careers, toppled leaders, sparked lawsuits and criminal investigations. But Denton can truly claim to be a believer in free expression, evidenced by personal attacks on him by his own staff on his own blogs. A few years ago, Denton believed someone was about to publish private “sex pictures” stolen from his phone. Rather than try to suppress their publication, he wrote a blog post about the episode — one he ended up never needing to publish, as the whole thing proved to be a hoax. But you get the point. He sees the role of his blogs – like that of Facebook and Twitter – as being “to uncover information about the way people actually live”.
Denton simply believes that there’s no secret that’s not worth exposing. That’s why his blogs have made a practice of outing public figures and why they continue to make claims about the sexual orientation of Apple CEO Tim Cook. Denton, who himself is openly gay, says: “It would be socially useful for the most powerful man in American business to be seen and widely known as being gay.”
What’s special about Gawker? Nick Denton has helped set the pace in ensuring that well-produced blogs are able not just to complement other media but to supplant them. Gawker Media is clearly one of the most profitable blogging businesses. He has brought journalistic flair to the way that comments by readers have always been an important element of Gawker’s model and is key to the strengths of digital media. Last year, he introduced a system that encouraged readers to send tips to the site and track others’ tips. Gawker knows how to make money from its readers and has a sales team dedicated to developing the comments section as a marketing and branding platform. It is easy to feel that Denton’s brand of journalism (sort of) makes him the 21st century heir to the no-holds-barred newspaper traditions of Randolph Hearst. Perhaps that explains the continual rumours of a Gawker deal with Rupert Murdoch.
UPDATE: 16 August 2016 from The Guardian:
The media company Univision has purchased at auction Gawker Media for a reported $135m, after the troubled digital news organization went bankrupt amid a costly legal battle with professional wrestler Hulk Hogan and tech billionaire Peter Thiel. The larger media company has one foot in legacy media and the other in digital, with an emphasis on outreach to millennials. Its largest assets are its broadcast stations and its cable networks, notably Fusion, which has a robust digital component of its own.
Univision has also been spending rapidly: in January (2016), the company bought digital humour publication The Onion; in April, it bought out Disney’s stake in Fusion. The company will need a presence in growth sectors of the media world – which broadcast and cable are emphatically not – if it’s ever going to get to its long-awaited IPO. Editor-in-chief Nick Denton said in a statement on Tuesday: “I am pleased that our employees are protected and will continue their work under new ownership – disentangled from the legal campaign against the company. We could not have picked an acquirer more devoted to vibrant journalism.” The other major player in the auction was 89-year-old magazine publisher Ziff-Davis, which had itself filed for bankruptcy as recently as 2008. The company owns IGN, a pop culture site that competes with Gawker blogs io9 and Kotaku; it bid a reported $90m for Gawker Media’s assets. (Source: The Guardian)
UPDATE: 18 August 2016: (from The Guardian)
Gawker.com, the flagship site of Gawker Media, will cease publication on Monday, according to a statement by Gawker Media founder Nick Denton delivered to staff on Thursday and reported by the site. The other Gawker Media publications, including Jezebel (women’s issues), Gizmodo (tech), io9 (science fiction, fantasy and science), Kotaku (gaming), Deadspin (sports), Jalopnik (all things automotive) and Lifehacker, are expected to continue publication after Univision’s acquisition of the company.
It’s been reported that Univision has agreed to keep 95% of the company’s nearly 300 employees in the United States and Hungary, to take over the leases for its office space in New York City and Budapest and to honor the recent union contract. Univision confirmed in a statement that it would not be acquiring Gawker.com as part of the deal. Denton sent a note to staff late Thursday, indicating that he would not be part of the acquisition and would be ending his time in the “news and gossip business”.
Though Gawker.com will remain an asset of the bankrupt and defunct Gawker Media organization, Denton said that the archives will remain online and held out hope for “a second act” for the site at a later date. Gawker.com, which started publishing in December 2002 and was one of the first sites in Denton’s portfolio, was initially a media gossip and criticism site, which – under the tenure of successive editors – morphed into something broader and eventually came to include in-depth investigations, pranks, personal essays and news commentary. Its latest iteration, helmed by Alex Pareene, was focused on “political news, commentary and satire”. (The Guardian)
4. Mia Freedman: Mamamia
Australia is the gilded country whose women’s magazines long had the world’s highest pro rata circulations, steepest cover prices, and best profit margins. They had it all. But one of the country’s best-known former editors Mia Freedman has already written the epitaph: ”Decisions were taken years ago that meant those titles never became digital forces which is a travesty because those brands should have quickly followed their readers online. Or got there first. Instead, they remained as printed products. Publishers didn’t realise they were content producers, they kept acting like magazine makers, much to the detriment of those once powerhouse brands. Now it’s too late. How do you stay current and relevant in a 24hr news cycle when you’re publishing once a week or once a month? It’s a very uncertain time and I can’t see things improving.”
That feels (just a bit) like an exaggeration of a digital future which will include some major brands with a command of loyal audiences – whether or not they are currently handcuffed to hard copy. But Freedman’s Mamamia super-blog is a real magazine-media phenomenon.
In seven years, it has become Australia’s leading women’s web site with a staff of 40, hundreds of contributors, and more than 635,000 monthly viewers. This is a four-fold audience increase in the last two years. Its native advertising revenues of some $4-5m derive mainly from those very beauty and cosmetics advertisers – like most of her readers – which were once the almost exclusive preserve of magazines like those she managed. Media people reckon Vogue has the best digital platform of any Aussie magazine – but Mamamia’s audience is 50% larger.
Politicians, TV broadcasters and newspaper columnists fall over themselves to quote Freedman or Mamamia. It’s a blog with a clear, distinctive and widely-supported tone of voice. In some ways, it seems like the complete online magazine for women, with digital and video content across a much broader range than anything in hard copy: “On any single day we will run a story about the political issue of the moment, share one woman’s heartbreaking experience of losing a pregnancy, explore the new ways media is distorting women’s bodies, and interview one of Australia’s favourite TV personalities….We’ll show you some awesome fashion ideas from women who AREN’T professional models, have a comedian relate an anecdote you’ll guffaw at, bring all the mums together for some group therapy on a 4-year-old obsessed with weapons, while also providing you with a cheat sheet to help you understand the conflict in Syria.”
What’s special about Mamamia? Lost advertising revenues have wrecked the profitability of many magazines, especially in newsstand-dominated markets like the UK and Australia. But readers have remained relatively loyal, which seems to suggest that many magazines could survive in some kind of blended digital-print world – with re-worked business models. Mia Freedman’s huge personal following in magazine-centric Australia shows that digital media can out-compete even long-standing publications. This may identify the need for magazines – as well as newspapers – to develop new (and different) digital brands separate from their print. Mamamia’s success, after all, clearly has something to do with its range of content being much broader than anything in women’s magazines. So, rather than slavishly developing clever-or-not digital versions of print brands, publishers should be developing new digital-only brands and content. Follow Mia.
5. Andrew Sullivan: The Dish
Andrew Sullivan is the British-born former editor of the US’s right-wing New Republic magazine, a regular contributor to the UK’s Sunday Times, and a pioneer of blogging. To add spice, one of America’s most-read and outspoken bloggers is Catholic, conservative, gay, was successively pro-Bush and pro-Obama, and is a graduate of Oxford and Harvard.
This is the extraordinary story of a journalist from the sleepy English town of East Grinstead (whose only other claim to fame might be as the one-time world headquarters of Scientology) who moved to the US thirty years ago and launched “The Dish” in 2000 when few people even knew what a blog was. Sullivan is credited with pioneering the blog as a medium where a writer can “think out loud”. His readership figures surged after the 2001 terrorist attacks in New York and his home-town, Washington, DC. “I experienced 9/11 very personally. The jihadists attacked my dream, my place—I felt like I had been beaten or raped. I succumbed to the fear a lot of us felt—panic really—about this country being in mortal danger. And neo-conservatism seemed like the only ideology on the shelf with a plan for how to react immediately, and I turned to it.”
He has switched views a bit, and his blog between platforms, including Time magazine, The Atlantic and the Daily Beast. Last year, he went solo and established The Dish as an independent, subscriptions-based operation. The move is being closely watched by media people everywhere because it poses the question about whether a writer can create a self-supporting business from their personal “brand” and following.
Sullivan declared early on that he wouldn’t take advertising and would be supported only by subscribers. He also made it easy for non-subscribers to view his fast-moving stream of content — collected musing on politics and pop culture. He established what has been described as a “tip jar” format, with readers volunteering to pay $19.99 a year.
He is being followed by other stars of journalism including: the former New York Times blogger Nate Silver (backed by ESPN), former Guardian writer Glenn Greenwald (funded by eBay founder Pierre Omidyar), and Walt Mossberg and Kara Swisher, who broke away from the Wall Street Journal to launch a news site funded by NBC Universal.
Sullivan set a goal of raising $900,000 a year to maintain the current standard of his blog and to do it without advertising. People pay $19.99 a year ($1.67 a month) to have full access to the site, but they can also pay more than than the minimum (and many, apparently, do). He actually raised about one-third of the target within his first 24 hours. Now, he has some 34,000 subscribers paying a total of £875,000 annually.
He’s got no debt but also no offices, and he’s managed to pay his 10 staff – but not yet himself.
That seems a pretty credible first-year performance for The Dish which is starting to experiment with funding methods. It is now planning to raise some advertising revenues by showing video ads to non-subscribers as an inducement to sign up. Sullivan insists that subscribers will continue to read the blog ads-free. And, next, he is planning a monthly magazine-style service called Deep Dish, also probably with some advertising.
His interim verdict on The Dish is instructive:” Writing a blog because you want to get people to renew their subscription in a year creates a very different, more subtle incentive structure for journalism than if you have to get as many page-views as possible….Yes, The Atlantic and Politico have gone on to become even bigger in terms of page-views….but…we have almost 30,000 paying subscribers which is 30,000 more than Politico, 30,000 more than Huffington Post, 30,000 more than The Beast, and 30,000 more than Vox.” Yes!
What’s special about The Dish? Andrew Sullivan is hoping to prove the case for individual journalists as “brands” that can be profitable in their own right – and funded by readers. It is a rallying cry for journalists everywhere. It might also become an important cue for daily newspapers to start unbundling their content. Without the production constraints of print, why won’t newspapers let readers subscribe online just to individual columnists or, say, to the sports or business or property sections? They might learn how to make new money in new media if they do. But, if they don’t, they may lose more of their star journalists.
6. Sharon Waxman: The Wrap
If you want another view of the problems of traditional media, you can’t do better than look at the Hollywood world of film, video games and movies which, for a 100 years, has been served by two powerhouse trade magazines. Time was when the legendary Variety (famous for headlines like “Sticks nix hicks pix” = rural audiences don’t like rural films) and its rival The Hollywood Reporter were published daily in Hollywood and weekly around the world. But the dailies have gone and so have most of the
profits. Their readerships have been sliced by three digital-only operations : Time Warner’s TMZ, and also Deadline Hollywood and The Wrap – two sharp-tongued sites which emphasise how experienced journalists can outpace traditional publications and build powerful media with small teams.
US journalist Nikki Finke began writing a column called “Deadline Hollywood” in LA Weekly magazine in 2002 and launched her blog of the same name four years later. She sold it in 2009 and left Penske Media (which had meanwhile also bought the ailing Variety from Reed Elsevier). Finke’s departure signalled the end (for now, at least) of some pretty bitter personal rivalry with Sharon Waxman, the former Hollywood reporter for the Washington Post and the New York Times, who had launched The Wrap in 2009 – just as Finke was selling out for undisclosed millions of dollars.
Waxman is the formidable, award-winning former foreign correspondent who launched with some $500k of funding (including from Starbucks boss Howard Schultz) and is now pushing on with a syndicated news service WrapWire. In May, for the first time, The Wrap claimed to have beaten Variety and Deadline in web traffic, attracting some 4million regular readers. Waxman employs some 30 people between offices in Los Angeles and New York, and describes The Wrap as “a little trashy, a little sassy, and a little serious”. She has been described as “one of the most powerful women in Hollywood”.
It’s an amazing career for Waxman who moved into Hollywood reporting just to get a job. “I’d been living in Paris as a freelancer and then a contract writer at the Washington Post. It was at that time, in the mid-1990s, that newspapers were already starting to cut back on their foreign bureaux. I had been trying to get a full-time position and then, finally, the Washington Post offered me a job in California where I had never intended to go. They didn’t actually hire me to cover Hollywood. They hired me as a style writer.” But now she lives and breathes the back-stabbing, champagne-swilling, image-obsessed Hollywood: “I care what this industry creates. I do believe that entertainment matters. I’ve been a foreign correspondent and I’ve seen first-hand the impact that popular culture created by Hollywood has across the globe. It’s not inconsequential.”
What’s special about The Wrap? This is a clear example of a rich information market which – for obvious reasons – has never lacked interest from all kinds of media and journalists. The result – in the heyday of Variety and The Hollywood Reporter – was huge revenues (relative to readership) but also high-costs and depressed profits (imagine the business lunches). But, for entertainment industry executives, information is power and can drive profits. Specialist media success, therefore, depends on high-quality journalists focused on the high-value information that once formed a relatively small part of packed hard copy publications. Today, there are countless free or inexpensive ways to distribute company-produced information to target audiences. So, there is a premium on the real news that was once described as “something that someone, somewhere wants to suppress…” It’s all about quality not quantity – sometimes an alien concept in hard copy publications where the number of pages depends on the requirements of either the printing press or the marketing department. Free digital information – paid by sponsorship and advertising – and produced by small, smart teams can create new opportunity for media profits. Nobody is boasting about The Wrap’s profits so presumably they still hardly exist. But there may never be any shortage of would-be owners of trophy media assets in Hollywood. There may, though, be many other B2B sectors that should go the same way.
7. Jessica Lessin: The Information
Jessica Lessin is the former Wall Street Journal Silicon Valley correspondent who founded tech business news service The Information in 2013. It is targeting professionals “who need the inside scoop on technology news and trends. We focus on the stories that drive conversations and help our subscribers get ahead.”
Lessin says: “We are focusing on writing for readers we think are under-served: professionals in technology and in industries being upended by it. These readers find plenty to read every day but they don’t consistently find news that is relevant to them and their business challenges. They don’t often find news that takes a stand supported by facts. We aim to do both. So, instead of chasing the highest number of eyeballs, we will chase and deliver the most valuable news. We’ve set the bar high. To succeed, we need to write articles that deliver value worth paying for. That’s why we’re a subscription publication.”
The subscription-only service costs $39 per month or $399 a year and has no free content – and no advertising. The “hard” paid-for strategy surprised observers. But Lessin says: “People talk about this type of paywall being good or bad, but it really depends on the content. The only type of content you’re going to pay that much money for is content that helps you in your business. All the different paywall experiences are very different because the content is different and the market they are going after is different. Subscription models only work for platforms that offer value beyond what you get for free.” Sceptics have pointed out that the subscription price is higher than for Lessin’s former employer The Wall Street Journal.
Why not advertising? “I really don’t think the ad business model is aligned with our mission. Any publication that makes a meaningful amount of money through advertising ends up writing stories that generate a lot of traffic to generate a lot of ad dollars. Publications wrestle with that editorial decision. The ‘bar’ for each of our articles is: “is this worth paying for?”
Business Insider, which knows a thing or two about upstaging traditional media and confounding the sceptics, explained why the model is viable: ”While all of us are laughing about how information wants to be free, Lessin and her colleagues are probably going to build a nice business for themselves. The company has five full-time staffers and two more contractors. If you figure the cost of each employee is about $100,000, then The Information only needs to find about 1,800 annual subscribers to break even. Fewer if people go for the monthly option. At that point, Lessin will have created a media company that pays five journalists solid full-time wages. And she’ll be doing it her way – with serious headlines for serious stories written for serious people, etc.
“At that point, the company will be a success by any sane measure of success. If Lessin somehow finds 5,000 subscribers, her company will have a profit of $1 million. Ten thousand, and Lessin will be $2 million into the black. Maybe Lessin will re-invest those profits into paying her journalists more or sending them around the world. Maybe she’ll stick it in a bank account and remember all our laughing. And then do it again the next year. The thing is: $2 million profits are not a big deal at lots of companies we write about here at Business Insider. But that’s because we’re usually writing about big public companies or small startups that are venture-backed and have to become huge companies to justify the seed capital.”
What’s special about The Information? It’s a small-circulation paid-for service that – just like in the heyday of small-subscription journals – can become profitable on a modest share of a well-defined market. The potential parallels are everywhere.
8. Ezra Klein: Vox
Vox is one of a handful of US-based services, including Quartz and Politico, that are producing ‘explainer journalism’. Apart from a declared mission to explain the news rather than merely report it, what these services most have in common is that they are built for mobile, social media-savvy audiences.
They are driven by a swell of optimism about the future of online news, and have established media players scrambling to adapt. Vox Media owns seven websites including Vox, The Verge, and the hugely successful SB Nation sports services. CEO Jim Bankoff says: “Digital news is a different medium, and it has different values and different voices. We focus on people who grew up creating things on the web.” Vox Media, the site’s parent, is financed by venture capital, and raised $34 million in its latest round of funding in October 2013. Vox itself has also found an early corporate sponsor in General Electric.
The way that digital services may squeeze the life out of increasing numbers of newspapers is underlined by the 2013 departure of Ezra Klein from the Washington Post. He is the 29-year-old creator of the Post’s best-read Wonkblog on healthcare and budget policy. He has been variously named as one of the 50 most powerful people in Washington, Blogger of the Year and Best Online Commentator. He quit in January, just five months after the Washington Post was acquired by Amazon’s Jeff Bezos, who apparently tried to persuade him to stay.
Klein says: “We are just at the beginning of how journalism should be done on the web. We really wanted to build something from the ground up that helps people understand the news better. We are not just trying to scale Wonkblog, we want to improve the technology of news, and Vox has a vision of how to solve some of that. We want to think really hard about how to connect not just new information, but to bring it together with important contextual information to create a more thorough source and place to understand the world.”
A few months in, Vox claimed 9million unique visitors in July and says the number was substantially higher for August. It certainly is trying to do things differently. It has some helpful features, including Vox Cards (the explainers) and StoryStream (real-time updates), both of which help readers understand the context of news stories. A toggle feature allows readers to alternate between an article and a full transcript of the interview behind it. Klein explains: “Print journalism had a length limitation that meant interviews had to be condensed down to a few sentences… Now we can put up the whole interview alongside the story. It’s a way of using the internet’s infinite length more effectively.”
What’s special about Vox? Not too much really – so far. What’s special is the calibre of Ezra Klein whose reputation has already swung a huge readership across to this quite experimental format. He has brought an audience with him. Nobody can be sure what Vox will look like in, say, 12 months. But it seems likely that it will be among the leading news purveyors on the smartphone. The emphasis on mobile is something it has already got right, although it is a moot point whether (and if) the emergence of viewing platforms like Google Glass might just bring the experience of full-screen reading even to smartphones.
It can get worse for traditional groups
This is a subjective selection of 8 distinguished journalists – a Canadian, Australian, two Brits, and four Americans – who are making huge waves in diverse areas of digital media. Their personal ‘brands’ now compete with those of long-established media. Traditional media should be concerned that these new-wave journalistic ventures are all about quality content, high-profile ‘personal’ brands – and low costs.
And there is a growing number of digital stars of journalism. Huffington Post, BuzzFeed, Bleacher Report, Mashable, Business Insider, the New York Times and the UK-based BBC, MailOnline and The Guardian are unmistakably well-equipped digital players. Quartz (from print-to-digital group Atlantic Media), Jim VandeHei’s Politico (now also being launched in Europe by Axel Springer) and Glenn Greenwald’s The Intercept are competing strongly too. Former fashion journalist Natalie Massenet – who founded content-rich online retailer Net-a-Porter – is a reminder also of the digital threat to magazines.