Month: January 2015

Not surprisingly, the announcement by veteran political blogger Andrew Sullivan that he is retiring from active duty sparked a firestorm of blogging-related responses (including one from me) in which many argued that the days of the lone blogger are over — just like the days of the cowboy or the polar explorer. Technology analyst Ben Thompson begs to differ, however: he says his site is doing better than ever, and that his success is proof that a subscription-based model for publishing works.

I’ve written about Thompson a number of times before, because I think his attempt to build a business around just his writing is an interesting one: he launched his site, Stratechery, in April of last year as a fairly unknown blogger — certainly not someone who was a household name, even in tech circles — with a tiered “freemium” subscription plan based primarily on long, analytical blog posts.

Within about six months, he had over a thousand subscribers paying him $100 a year for access to his newsletter (the shorter daily posts on the website are free). That meant an annual revenue run-rate of about $100,000 — enough to make it a living, along with some speaking and consulting, and tentative proof that a “thousand true fans” model like that envisioned by Wired editor Kevin Kelly could actually work on a practical basis.

Niche readers will pay

In a response to the “blogging is dead” meme that was triggered by Sullivan’s announcement, Thompson says that he just passed the 2,000-subscriber mark, which means he now has a revenue run-rate of about $200,000 a year (the “churn” rate, or the rate at which subscribers drop off, is less than 10 percent he said). And this proves a niche model that serves a specific interest group will work, Thompson argues — as well or better than a model that relies on mass advertising revenue.

“I am, of course, acutely aware that there is a tradeoff when it comes to the subscription business model: by making something scarce, and worth paying for, you are by definition limiting your number of readers. Stratechery, though, serves a niche, and niches are best served by making more from customers who really care than from milking pennies from everyone.”

In fact, Thompson argues — and I agree — that Sullivan’s own success proves this case: in less than a year, the Daily Dish blogger managed to convince more than ** subscribers to contribute money, and by last year was pulling in close to $1 million in revenue solely from subscriptions. That may look sad compared to the revenues of a site like BuzzFeed or Vox, but it’s an amazing success for a small team with a single blog.

The core of Thompson’s argument is that the more niche and targeted your content is, the better off you will be with a subscription model (The Information, started by former Wall Street Journal reporter Jessica Lessin, is another good example). Sites like Vox have to go broad, he says, but that ultimately means that advertising revenue is your only option, and making that work requires hundreds of millions of pageviews (unless you go after a very specific topic niche like Daring Fireball blogger John Gruber does), or a site like Search Engine Land.

The barbell effect

In a sense, the blogging world — or even the world of online publishing as a whole — has bifurcated to create what I call a barbell effect: sites or even publications like newspapers that are huge and broad and have powerful brands will likely succeed, because they can make advertising work. And those that are small and targeted (either by topic or by geography) will likely also be fine. Everything in the middle, however, is in for a world of pain, and in most cases will not survive.

Vox’s Ezra Klein and BuzzFeed’s Ben Smith may argue that size and scale is the only route to success, says Thompson, but that isn’t the case — there is room for the one-man (or woman) blogger as a lifestyle business as well:

“I almost feel compelled to note that my conclusion – and experience – is the exact opposite of Klein’s and all the others’: I believe that Sullivan’s The Daily Dish will in the long run be remembered not as the last of a dying breed but as the pioneer of a new, sustainable journalism that strikes an essential balance to the corporate-backed advertising-based scale businesses that Klein (and the afore-linked Smith) is pursuing.”

Not everyone will be able — or will even want to — put in the kind of work required to maintain such a site, as Thompson admits. After all, Sullivan’s departure didn’t come because his model wasn’t working, but because he was simply worn out. But for those who do want to pursue this individual model, the Stratechery blogger argues that the potential for them to do that, and to be successful at it, is larger than it has ever been.

As we’ve described here a number of times, one of the biggest disruptions in the media industry has been on the distribution end — the actual creation of journalism and other content has also changed, but even more important is the shift from media outlets controlling the channel (newspaper, magazine, TV network) to relying on outside platforms such as Facebook, Twitter and Google for distribution. And that has brought with it a host of challenges, including ethical ones around how free speech and freedom of the press are handled by platforms that have no journalistic motivations whatsoever.

This is the landscape that Emily Bell, the director of the Tow Center for Digital Journalism at Columbia University, recently tried to outline in a speech to journalists in Britain given in honor of Hugh Cudlipp, former chairman of the Daily Mirror newspaper group. In a nutshell, Bell — the former head of digital at The Guardian — argues that both sides, social platforms and journalists, need each other more than they think.

Rise of the tabloid web

As Bell points out, most newsrooms — even the slow-moving, traditionally-focused ones — have come to realize that they need to understand and take advantage of the social sharing that platforms like Facebook provide, because that is how content works now. Everyone wants to “go viral.” In a sense, the web is encouraging everyone to think like the editor of a tabloid newspaper like the Daily Mirror.

“Today, the new newsroom has optimisation desks, to make stories work better on social media, data scientists who analyse the information about story performance to tell journalists how to write headlines, produce photographs and report stories which will be ‘liked’ and ‘shared’ more than others. It has aggregation desks, which scour the web to find news that ordinary people have posted for a wider audience.”

Control has been lost

The problem — as Bell outlined in a similar lecture last year at the Reuters Institute for the Study of Journalism — is that journalists and media companies no longer have any control whatsoever over what happens to their content once they publish it. Proprietary networks like Facebook and Twitter and Google are now the power brokers who determine who sees your story and when, and their decisions are made for reasons that may have nothing to do with the journalistic quality of your content.

“We are seeing unimaginably large new entities, which get their size from publishing not just a selected number of stories but everything in the world. Social networks and search engines are the masters of this universe. As we see the disappearance of print as a significant medium, and the likely decline of broadcast television, the paths our stories and journalism must travel down to reach readers and viewers are being shaped by technologies beyond our control.”

As publicly-traded companies with a bottom line to look after, these platforms have their own interests to protect, Bell says — and that means they may be less than inclined to support or defend principles that journalists take for granted, such as free speech or freedom of the press. While Twitter makes a point of challenging court orders and fighting government requests for the blocking of content, and Google has also been known to do this, Facebook seems more than happy to remove content, in many cases without notice.

As Jillian York of the Electronic Frontier Foundation has pointed out on a number of occasions, platforms like Facebook and Twitter have become the new public square, except it isn’t public at all — it’s more like a shopping mall, where private security can have you removed at will. Global Voices co-founder Rebecca MacKinnon made a similar point in her book Consent of the Networked, about how much of what we consider free speech has been taken over by private corporations. Says Bell:

“Google and Facebook are magnitudes larger and richer than any other entities, and more influential in terms of reach than any press company in history. Until now though, the default position of participants in the sharing economy, with the exception perhaps of Twitter, has been to avoid the expensive responsibilities and darker, more complex aspects of hosting the free press.”

We need each other

As an example, Bell points to Google handing over personal information about members of WikiLeaks to the U.S. government, something she calls “a chilling reminder of either how little Google understands what supporting free speech means or its naked dishonesty.” No serious news organization would ever do such a thing she says, and it calls Google’s trustworthiness as a platform into question (Google has since said that it tried to alert those users to the government’s secret court order, but was prevented from doing so).

It’s not just Facebook and Google that Bell is concerned about. There are other issues that the democratization of journalism brings up, she says — issues that were highlighted in two recent cases: one in which Jordi Mir filmed a French police officer being shot after the attack on the satirical newspaper Charlie Hebdo, and another in which Ramsey Orta filmed a New York police officer choking Eric Garner.

“Mir and Orta are not journalists, but they were sources. They were not on the staff of any newspaper or agency; they were not paid a salary; they had had no training; they were not members of any union, they have no added protections that might be afforded to the press [but] we have a responsibility towards them in both a broad and specific sense. They might not be journalists but they are part of our ecosystem of news.”

The bottom line, Bell says, is that journalists and technology companies or social platforms need to work together to figure out how to handle the atomized, networked and democratized media environment we all find ourselves in. It’s not enough for Facebook or Google to say they aren’t journalistic organizations and therefore they don’t have a duty to consider things like free speech — they are functioning as journalistic tools, and they have a larger responsibility to society as a result.

“Journalism needs a lot more journalists who are technically proficient, and the new gods, the platform companies, social networks and search engines, need to hire a lot more technologists who are proficient in news. Because at the moment we have a situation which is not working for either of us… we need to work together, because we are now part of one continuous global information loop.”

As it has grown from being a media laboratory in which Jonah Peretti experimented with viral content into a full-fledged media entity worth close to a billion dollars, BuzzFeed has had to amend some of its previous practices — including the use of images with little or no attribution, something it was heavily criticized for in the past. As part of this growing-up process, the company has now come out with a new editorial standards and ethical practices guide that lays out what staff can and can’t do.

The guide was put together by BuzzFeed’s executive editor for news, Shani O. Hilton, over the past few months. But Hilton made it clear the document was a collaborative effort involving the company’s entire editorial staff, as well as outside experts who were consulted on various questions of journalistic ethics. And the site decided to publish it, she said, because it wants to be transparent with its readers.

“BuzzFeed has the opportunity to help shape a new set of standards for a new generation of media. We are offering these standards to our staffers and to our readers as a first attempt at articulating the goal of merging the best of traditional media’s values with a true openness to the deep shifts in the forms of media and communication. We are making this document public to keep BuzzFeed’s writers, reporters, and editors accountable to our readers.”

Separate standards for Buzz

Although the document applies to all the members of BuzzFeed’s editorial staff, some elements of the standards it describes are different for specific sections, Hilton says in her post announcing the new guide. The site separated its work into three content units last year: Buzz refers to the kind of listicle or GIF-driven post that the site became known for in its early years, Life is dedicated to posts about lifestyle topics, and News is where the more serious political or investigative content appears.

So, for example, the guide says that BuzzFeed News staffers “should refrain from commenting in a partisan way about candidates or policy issues” and are not allowed to donate money or volunteer for political candidates. BuzzFeed Life and Buzz staffers, however, are allowed to “express personal views on policy in a non-partisan way” and to volunteer for candidates — unless they decide to write about a political topic, in which case they have to abide by the same rules as a News staffer.

As is common with the standards and practices at most mainstream media entities, BuzzFeed’s guide notes that reporters should never share drafts of a story with a source before publication or give them quote approval, should only use anonymous quotes in extreme circumstances and after checking with an editor first, and should not accept freebies — including travel — or compensate sources for their stories or quotes. One section that might be unique to BuzzFeed is the one that talks about not taking selfies with celebrities:

“Selfies are fantastic and you should take them as often as possible with friends and loved ones. But when celebrity visitors come to a BuzzFeed office, please don’t ask for photographs unless the staffer who brought them in has checked that it’s okay. BuzzFeed News reporters should use good judgment when taking images with their subjects.”

Editorial vs. advertising

One other interesting element of the new standards guide is the section that talks about the separation between editorial staff and those who do custom-content production for BuzzFeed’s advertising unit, including its BuzzFeed Motion Pictures operation. While some traditional media entities such as Conde Nast have blurred the line between editorial and advertising by getting editors to work on both, BuzzFeed says the so-called “Chinese wall” between these two sides of the operation is firm.

“BuzzFeed relies deeply on the trust of our readers that we are bringing them accurate reporting, great entertainment, and useful service — and so we maintain a strict and traditional separation between advertising and editorial content. The work of reporters, writers, and editors is entirely independent of our ad salespeople and their clients. Ad creatives report to the business side of BuzzFeed, not to editorial.”

Editorial staffers “should never discuss a story about a company with a business-side staffer who works with that company,” the document states, and anyone who works on the business side of the site who wants to talk about editorial content “may communicate them only to the editor-in-chief.” While the company says it encourages staffers in editorial to collaborate with staffers in video or on the tech or data side of the company, “edit staffers must never collaborate or contribute to content that is part of an ad campaign.”

The standards guide doesn’t talk specifically about the attribution of images, which became a controversy in 2012 after complaints from Reddit and other sites that BuzzFeed was taking images and re-using them without proper attribution. Hilton said that this topic would be dealt with in a future update. But the document does say that all information used in news stories must come from a “verified source,” and that plagiarism is forbidden: “To plagiarize is to trick the reader. Nothing may be copied, pasted, and passed off as one’s own work, including press releases.”

BuzzFeed political writer Benny Johnson was fired last July after a couple of anonymous bloggers pointed out numerous examples in which he had plagiarised material from other websites and news outlets. In a response to the New York Times, editor-in-chief Ben Smith said that while BuzzFeed might have had different standards when it began as an experimental project, it intended to hold itself to much higher standards. The document Hilton has put together is clearly part of that effort.

One other area in which BuzzFeed has changed its practices after much criticism is the area of deleting old posts: last year, the site was widely criticized for removing more than 4,000 posts in a mass deletion effort that founder Jonah Peretti said was intended to clean up items that didn’t make sense any more or were broken in some technical way. But many journalists saw it instead as an attempt to erase history, and Smith later said that the process was handled badly because the site didn’t think through the implications.

The new standards document says “editorial posts should never be deleted for reasons related to their content, or because a subject or stakeholder has asked you to do so.” Posts can be unpublished in some cases if they go up early due to a mistake by an editor, but even if the post is based on incorrect information, it should not be removed but instead should be updated or corrected, or disclosed to be false.

Historically, new-media ventures haven’t triggered the same kind of frenzied stampede of venture investors as other online businesses, in part because their profitability and scalability remains very much in question, but the last six months have seen an almost unheard-of amount of money pouring into media companies. It’s not like anyone is buying them for $22 billion, the way Facebook did with WhatsApp, but there’s no question that some very large — and potentially risky — bets are being placed on the future of media.

The latest deals were announced on Wednesday by Mashable, which said it has closed a new round of financing worth $17 million — bringing the total amount it has raised to $31 million — and Business Insider, which has pulled in $25 million from a group of venture investors, bringing its total investment backing to almost $60 million.

Traditional media buys in

One interesting thing about both announcements is that the lead investor is a traditional media entity: in the case of Mashable, it’s the venture-capital arm of Time Warner, the magazine conglomerate spun off by its parent last year, and in Business Insider’s case it’s German media giant Axel Springer, which owns a number of leading German newspapers. Here’s a list of the major deals that have closed in just the past six months:

Vice: Raised $250 million from A&E Networks for 10 percent of the company in August of last year, plus another $250 million from the VC fund Technology Crossover Ventures, both of which valued the company at about $2.5 billion. Vice has over 1,000 employees and is adding more foreign reporters at a fairly rapid pace, and expanding its video operations. It is also one of the leaders in the “native advertising” market, with a custom-content unit that creates branded content for advertisers.

BuzzFeed: Closed a $50 million round led by Andreessen Horowitz in August last year, theoretically valuing the company at close to $1 billion. BuzzFeed now has almost 1,000 employees — including its L.A.-based video unit, known as BuzzFeed Motion Pictures, run by Ze Frank — and plans to invest in opening more foreign bureaus. Like Vice, it also has a large custom-content advertising operation.

New players on the field

Vox: Closed a round of $46 million from a venture-capital group led by a fund called General Atlantic, which values the company at close to $400 million. Until it invested in Vox, General Atlantic — which invests on behalf of a trust set up by **, the reclusive co-founder of the Duty Free Shopping empire — had never made a media investment. At the time, a partner in the fund said:

“We think we are at an inflection point. For the next five years, you are going to have the next generation of media platforms emerge. There are parallels to cable in the ’80s. There is going to be a huge amount of value creation.”

Business Insider: Just closed a $25 million funding round led by Axel Springer, the German media giant that owns popular daily newspapers such as Bild and Die Welt. Business Insider, which has about 200 staff, says it plans to hire about 100 more and expand into video, and a source also told the Wall Street Journal that the company was profitable last year. Business Insider says it has the highest traffic of any business or finance-oriented site in the U.S., with 35 million unique visitors per month.

Mashable: Just closed a $17 million financing round led by Time Warner Investments. Mashable says it will hire 100 new employees and is expanding into video. The Time Warner connection is particularly interesting because there was a widespread rumor in 2012 that Mashable was going to be acquired by CNN. Whether this investment is a stalking horse for a full acquisition remains to be seen. Mashable told the Wall Street Journal that its revenue in the past year grew by 45 percent.

Gawker: Although it isn’t an equity financing — since founder Nick Denton clearly wants to retain control — Gawker is in the process of raising $17 million in debt financing to pay for its planned expansion, including further investment in its Kinja discussion platform and mobile, as well as a new office planned for the Flatiron district in New York. Unlike most of its competitors, Gawker makes a substantial amount of revenue from affiliate links, which Denton says pulled in $10 million last year.

But can they scale?

As I tried to point out in a post late last year after the BuzzFeed and Vice financings were announced, there is still a rather large unanswered question about this influx of venture-capital funding into new media: Can these ventures scale to a point where they can justify all that investment? Both Vox and Business Insider make a point of talking about their content-management systems (which Vox calls Chorus and BI calls Viking) but having a CMS doesn’t necessarily make you a tech company.

When it comes to showing that they can scale to a size that would theoretically make them a competitor for existing major-media brands, only Vice has arguably achieved that, with a business that covers news on a global level, produces entertainment and drives a lot of advertising revenue, all based on a valuable millennial audience.

At the same time, however, advertising is also part of the problem. For the most part, these companies are still fundamentally identical to old-media companies in some crucial ways: for example, while they may have lower distribution costs because they are online, they still have to employ the most inefficient value-creation engines ever invented — namely, human beings. And their businesses are still driven primarily by advertising, which is going through almost as much upheaval and disruption as the media business itself. And the stakes have just gotten exponentially higher.

If you mention social-media platforms like Twitter or Facebook in the context of political uprisings in places like Turkey or Ukraine or Egypt — or even the Occupy movement in the United States — the person you’re speaking to will likely either a) agree that they can be very powerful tools, or b) argue that they are just sound and fury, signifying nothing, and have had no real effect on the outcome of these movements. But the truth is actually much more complex, according to sociologist Zeynep Tufekci, who has spent her career studying the effects of such social platforms on political behavior.

In a paper published in the Journal of International Affairs, Tufekci looks at this question in detail, based on her observations of and interviews with protesters in her native Turkey and elsewhere. And her conclusion is that while social platforms can have a positive impact on the ability of dissidents and alternative political movements to organize and communicate — as she has described in previous articles looking at social tools and political “tipping points” — they can also have negative effects.

A crucial information source

The benefits are obvious when looking at uprisings like the “Arab Spring” in Egypt and Tunisia in 2011, or the political events leading up to the more recent Gezi Park protests in Turkey, Tufecki says. In the latter case, social media became a crucial source of news, in part because the traditional media in Turkey weren’t covering the demonstrations for fear of upsetting the government. And in Egypt, mobile phones and blogs became the tools of a protest movement that ultimately helped unseat the government:

“The advent of blogging and the rise of cheap cell phones with video cameras also created major changes as activists started acquiring, publishing, and circulating video evidence of the many grievances that made every day life difficult for citizens.”

By giving dissidents the ability to share this kind of information quickly, social tools such as Facebook (which was much more widely used in Egypt than Twitter) made it easy to connect groups of protesters and plan events. That kind of organizational feature can have a powerful psychological impact, Tufekci has said, because once people know that others share their beliefs or feelings about a movement it becomes easier to take collective action, something she calls an “information cascade.”

The landscape has changed since the Arab Spring, however. As the University of South Carolina professor and Harvard Berkman Center fellow notes in her paper, governments have more or less caught up to political protesters when it comes to social media. Twitter and Facebook aren’t just for nerds any more — they have become mainstream, and that means governments have figured out not only how to block them (or how to force Twitter and Facebook to remove content) but how to use them for their own social purposes.

“Many governments have developed methods to respond to this new information environment, which allows for fewer gatekeeper controls, by aggressively countering these new movements, often with a combination of traditional repression as well as novel methods aimed at addressing online media.”

A double-edged sword for dissidents

And that’s not the only problem: As Tufekci discussed previously in a post on Medium, the use of ubiquitous social tools by protest movements and dissidents is a double-edged sword: the fact that these tools make it so much easier to find like-minded individuals and organize them is a positive thing, because it allows a movement to grow and become effective much more rapidly, and to adapt to a changing environment.

At the same time, however, those same features may prevent protest groups from becoming as cohesive and robust as they need to be in order to survive over a long period of time. Old-fashioned political movements took years — or even decades — to develop and build an organization, and while that often meant that political change also took a lot longer to occur, the movements themselves were arguably more powerful.

“Digital technologies certainly add to protester capabilities in many dimensions, but this comes with an unexpected trade-off: Digital infrastructure helps undertake functions that would have otherwise required more formal and long-term organizing which, almost as a side effect, help build organizational capacity to respond to long-term movement requirements.”

In a sense, it’s probably fitting that social media would be a double-edged sword when it comes to political movements, since the internet as a whole has proven to be the same kind of thing: even as it facilitates piracy and arguably incites hatred and violence, it also promotes creativity and helps people in need find others who share their problems. We often want things to be either good or evil, but they rarely are. You can read Tufekci’s paper here.