The Bubble’s beside the point
The New York Times, the Wall Street Journal and the Financial Times all ran articles this week on the rapidly changing digital news landscape. All explore whether the recent funding of several digital news startups might be creating a bubble in the Internet news arena.
First up was David Carr who used Ezra Klein’s announcement that he’s moving over to Vox Media to make the point that Klein’s move is less about escaping old media than “going toward something else.” That “something else” is a native entity that is “optimized for the current age.” Carr likens places like Vox to the cable programmers who turned entities like CNN (fondly known as the Chicken Noodle Network back then) into “big businesses today.” He writes that places like Vox, HuffPo, Buzzfeed and others “will eventually mature into the legacy media of tomorrow.”
Carr puts a stake in the ground around one huge question explored in our Riptide report: That legacy providers never really embraced technology as central to their transformation. He writes: “In digital media, technology is not a wingman, it is The Man.” This was a major theme in our report and goes back to the earliest days of digital media. Eric Schmidt was perhaps most direct when he told us that you can’t innovate without engineers, and that legacy news companies simply don’t have them in any quantity. Cathy Yates, an early leader at Knight-Ridder Digital, disagreed. It was the underlying culture, not the talent issue, according to Yates. She told us she hired plenty of engineers, going back to the very beginning of web publishing. In my view, the bridge between these two perspectives was built by Will Hearst. Hearst agreed with Schmidt, but added the crucial thought that legacy media businesses and their boards have never placed deeply technical people in key leadership roles. So even if there’s a CTO or CDO sitting at the table, the essential strategy and direction is run by folks who don’t have the technical fluency to make the crucial decisions about the product portfolio. That can’t work in this rapidly evolving environment.
Will Launder’s Wall Street Journal piece (subscription required) explores the collapsing ad rates at many news sites. He also uses Klein’s departure as a hook, but goes in a very different direction from Carr. One of the sites he focuses on is GigaOm, which recently folded its paidcontent acquisition into the main site. Om Malik, GigaOm’s founder, spoke to us about the many differences between running a legacy operation and a startup. As a funny aside, he mentioned David Carr as someone who might not be affordable for most news startups. Perhaps that’s no longer true, or perhaps David might tradeoff some cash comp for equity, but Carr’s point seems to be that a thousand flowers are blooming, and some of them will turn into beautiful gardens. Launder seems much less sanguine. He closes with a quote from Jim VandeHei, a founder of Politico and another Riptide interviewee:
Mr. VandeHei suggests most investors seeking big returns would be better off betting their money on other sectors, like health care or energy, unless they are “passionate about journalism.”
This brings us to today’s piece by Henry Mance in the Financial Times. Entitled, “News groups face age-old problems with online startups,” the article discusses the increasingly difficult competitive environment for legacy news companies. While Mance mercifully leaves the omnipresent Ezra Klein out of this one, he does mention the omnipresent Buzzfeed, “the US-based website that wants its articles to be shared above all else.” With forecast revenues “of more than $100 million this year,” Buzzfeed is now moving beyond “simple entertainment” and is – according to the BBC’s James Harding – ‘muscling up to become a serious news machine.’ Buzzfeed’s history and strategy is discussed by it’s founder, Jonah Peretti, in our Riptide report, and this brings us back to Carr’s piece.
In the end, the question isn’t just whether successful news startups can satisfy the needs of venture capitalists. As Carr notes, the real issue is quality. Buzzfeed and others (including interviewees Henry Blodget, Arianna Huffington and Nick Denton) are trying to build this bridge. They are making important strides. But so far nothing quite replaces the three news organizations I’ve cited today in terms of sheer editorial “muscle,” to use Harding’s word. Will that change? If Clay Christensen’s theories are right, it will — just read his Riptide interview to find out.
January 29, 2014, 1:30 pm