Wednesday, March 27, 2013

What is a media startup 'success,' anyway?

I'm having some trouble understanding what "success" is as it pertains to a new publication. It's a term we in the press freely lob around to describe our peers' efforts, but we don't really define what the benchmark really is.

A recent PBS MediaShift article about Business Insider, Henry Blodget's sprawling enterprise, pushed the topic to the front of my mind.

In it, Dan Reimold writes:
A bit more than four years after its launch (and six years after the launch of its smaller predecessor Silicon Alley Insider), BI has become one of the boldest business news sites in the world. Its coverage base has expanded from tech and Wall Street to areas such as politics, retail, advertising, sports, science, and military and defense. It boasts roughly 100 staffers and 25 million monthly unique visitors (though pegs uniques at 3.8 million last October). Amid jabs at its editorial and aggregation practices, it is regularly held up as a digital news success story -- with hopes its profits will match its web hits in the years to come. 
It's that "digital news success story" bit that I get hung up on. What does that mean, exactly?

I've been critical of the publication's editorial practices in the past, though I understand how they play into its business model. Still, that's not the issue at hand here.

We call BI a success. Here's what we know:

Traffic. It has captured a great deal of attention -- broad attention, not just by media pontificators -- through its search- and social-favoring editorial tactics. Its "readership," to use the print definition of the term, is large. (The size of its subscription base -- loyal, regular readers -- is unclear.) If more is better, BI is a success.

Employment. The company hires dozens of writers each year. From an economic and industry perspective, that's definitely a success. That means more money is flowing into the hands of those who make the publishing business what it is.

Credibility. The more people, notable and not, that BI hires, the more that others in the press -- tastemakers, in other words -- discuss and watch its actions. And because of key hires, e.g. Joe Weisenthal, the site has the attention of certain groups, such as those who work in financial services.

Lifespan. BI has managed to scale to these dizzying heights in the span of six years, a relatively short time.

All of the above are good reason to call BI a success. But there are several aspects of its operations that contradict this.

The balance sheet. Despite millions in revenue, the company has turned a profit just barely -- a couple thousand dollars in 2010. (Perhaps it made more last year.) That number will have to increase for the company to make up the money it has lost since late 2007, and increase further still for the company to start generating enough money to pay back the $13.6 million hole it dug in venture funding.

Readership. BI has a lot of traffic, sure -- but how much are those drive-by eyeballs worth, really, when they can't easily be sold against as a cohesive audience? There will always be mass media platforms, but right now the site's success is more a function of its distribution tactics -- which is at the whims of Google, Facebook et al -- than its actual content.

Employment. If you hired 100 people full-time, would you too enjoy such an audience? (How much success can be attributed to sheer brute force?)

Credibility. The established press tends to turn its nose up at gossipy rag sheets, and Business Insider is no exception with its desperate headlines and rudimentary prose. (Vanity Fair it is not.) While that doesn't impact the profit question -- someone's got to address the low end of the market, always; nothing wrong with that -- does this color how the average person defines success?

Lifespan. Is it subpar, average or over-achieving for BI to have reached profitability in three years? Most publishers give a print magazine the same window to turn a profit.

There are certainly other elements to consider, and to be fair, BI isn't alone in this space -- BuzzFeed, NowThisNews, the Huffington Post and -- for a time -- Gawker have all dabbled in this. (There are many less successful sites that have also done the same.) Meanwhile, there are plenty of smaller, niche websites that are narrow in scope, read loyally by a few, and profitable. And there are plenty of publications that straddle the line: Bloomberg Businessweek has high-quality content and a subscriber base, but is famously subsidized by a wildly profitable financial terminal business; the New York Times commands the most authority of any news organization in the U.S. and is considered a temple of quality journalism, but barely ekes out a profit.

So back to the fundamental question: is Business Insider a success? With consideration to all of the above, I'm not so quick to answer in the affirmative.

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