All 1 entries tagged Joshua Chaffin Financial Times
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August 31, 2008
Web 2.0 Opportunity For Entrepreneurs: The Huffington Post
I almost always find something of media related interest in the Financial Times Weekend and this weekend was no exception. There was an interesting article by Joshua Chaffin on the rise and rise of the Huffington Post an extremely successful blog based "online-newspaper" in the US. It is run by Arianna Huffington whom some of you may remember from the 1970s as the infamous anti-feminist Arianna Stassinopoulos.
In many ways Chaffin's article supports some of the points I was making in a discussion of the issues being raised by some media analysts around the need for Media Studies 2.0. My argument then was that the present user generated content from blogging and similar types of new media associated with Web 2.0 would eventually fragment into work which was being done professionally / semi-professionally and a more leisure-based hobby based type of approach. The latter being very much a virtualisation of small scale hobbyists, magazines etc. These might generate small amounts of advertising for relatively small niche markets. For the more serious bloggers the aim is to make a splash and also to earn money through the enterprise because to blog seriously and to research the content would be pretty much a full time job and the rest. This means that inevitably the best bloggers will either re-prioritise their time to do something else, be highly succesful at blogging so that they generate sensible amounts of advertise revenue / sponsorship to make a living or else they will build a user base which might conceivably be seen as 'added value' if a fully fledged media company decides to buy them out and use the virtual real estate and pay a salary for the generation of future content.
The Huffington Post and Arianna Huffington don't quite fit any of these models. She became a born again blogger early on and, given her past, is extremely well connected at higher levels in Californian society. As a result she has beeen able to gain professional advice, as well as venture capital from people like Alan Patricof to help establish her political blog. According to Chaffin's article it is receiving in the region of 4 million unique users per month. The blog was founded in 2005 and is now one of the most popular political blogs.
There has apparently been much talk about expansion of the blog with the intention of establishing new sections. She is hoping to raise another $10-20 million dollars to back this expansion. some people are speculating that the site could be worth $200 million however this could be rather an overestimate for as Chaffin notes cautiously:
...the site is not consistently profitable .Bloggers have not yet proved they can convert traffic into advertising dollars. (Chaffin W/E FT p 11)
Naturally this argument was of interest because anybody trying to raise $10-20 million for a blog is redefining the meaning of the term which originally signified slightly geeky people whipping out their thoughts to the world which for the most part ignored them. Here Web 2.0 is turning into a serious media venture. OK the model doesn't precisely fit but it shows that there is venture capital money out there backing likely looking ventures and trying to establish new audiences interacting with media in different ways, which accords with the spirit of my argument. Certainly Jeff Jarvis has been impressed as Chaffin has noted in the FT:
"They laughed when Arianna sat down at the keyboard, but she was right, and she's built something pretty incredible," said Jeff Jarvis, a journalism professor at the City University of New York who also writes a media blog, BuzzMachine.
So how does a site like this make money and how does it build its audience? these seem to be the critical questions for new media enterprises which makes them exactly the same as so-called old-media. Everything must change so that everything remains the same to paraphrase Lampedusa in The Leopard! Chaffin put it very clearly in an earlier FT commentary in 2007:
These days, Ms Huffington and her partners tend to recoil slightly when the Huffington Post is called a blog. To them, blogging is merely the latest technology tool to transform the news industry - just as cable television yielded CNN and the 24-hour news cycle. While that tool may be central to their success, their aim now is to expand the Huffington Post into a mainstream media business - a path that other blogs are also pursuing as the once-fledgling medium becomes more professionalised.
What Happens at the Huffington Post?
Well, with 4 million unique hits per month its a little hard to define the audience however to put the numbers in perspective the Guardian released its figures a couple of weeks ago and the numbers were in the 18 million range with the Daily Telegraph lagging not too far behind. Obviously a key difference between these well established British dailies which have developed parallel web-based facilities is that they have already got a brand name, a well developed regular readership and a well developed peripheral readership who probably buy / read the paper on an intermittent and possibly regular basis. I usually get a Monday Guardian for the media pages for example but the Weekend FT and the Independent occasionally as well. Yes they are available online but I actually like a hard copy especially on the train if I'm travelling that way.
Both the Guardian (8/10 Google ranking just for the blogs page ) and the Daily Telegraph (7/10 just for the blogs page)have developed blogs from some of their regular correspondents. So has the Financial Times (6/10 Google ranking) although the FT has a more sophisticated system for registering and providing online services primarily targetted at business users. There is then a parallel subscription service as well as the online advertising model that they all use. The BBC Blog Network (7/10 Google ranking) is a recentinitiative by the BBC to centralise all their blogs as well, to date people have been accessing them independently via links on the current newspages for example. Doubtless the Google ranking will rise as more people discover the page full of links to all areas of the BBC. As a regional paper the London based Evening Standard blogs page gains (6/10). Even a much smaller paper such as the Coventry Evening Telegraph blogs and forum page gains a Google 5/10 ranking. This quick research of the web based aspects of older media organisations shows that many if not most of them are in the process of making well organised transitions to a web based format runnng in parallel with the main services previously offered. With the exception of the BBC (for obvious reasons) all seemed to have a healthy balance of adverts, so advertising too is making a good transition to the web. None of the sites mentioned seemed to suffer from irritating pop-ups.
Obviously potential advertisers will be given access to at least some of the key analytics benchmarks in terms of not just number of hits but regulararity of use, and the most accessed columns and pages and how long users stay on them. The cost of advertising can then be worked out in a similar way to hard copy. Furthermore the greater the use the better the quality of advertisers drawn in which means better graphics, more amusing adverts etc. In reality good adverts provide users with a far better media experience and can prove to be an attraction rather than an irritant if they are well used.
Audiences for mainstream media sites in the UK seem to be strong. Remember 4 million hits per month is in the region of 120,000 hits per day and the problem with measuring who "unique" users are is difficult if people are not logged into the site's own system as then a regular visitor could be using the site from different computers. Chaffin reports that Huffington's site has 4 million unique users as measured by the analytics system but these cannot be totally accurate and it may be possible to "cookie" the books:
Authentication, either active or passive, is the most accurate way to track unique
visitors. However, because most sites do not require a user login, the
most predominant method of identifying unique visitors is via a persistent cookie
that stores and returns a unique id value. Because different methods are used to
track unique visitors, you should ask your tool provider how they calculate this
A unique visitor count is always associated with a time period (most often day, week,
or month), and it is a “non-additive” metric. This means that unique visitors can not
be added together over time, over page views, or over groups of content, because
one visitor can view multiple pages or make multiple visits in the time frame studied.
Their activity will be over-represented unless they are de-duplicated.
The deletion of cookies, whether 1st party or 3rd party, will cause unique visitors to
be inflated over the actual number of people visiting the site. Users that block
cookies may or may not be counted as unique visitors, and this metric is handled in
different ways depending on the analytics tool used. Ask your tool provider how
blocked cookies are managed in their tool: it is important to understand how this
impacts other metrics with regard to these visitors. (Web Analytics
Association Standards Definitions. My Emphasis)
What Future for the Huffington Site?
Huffington has been a social networker for decades gradually moving from right to left in the political spectrum, opportunism eclecticism if not 'me-ism' are the core values I suspect. Here's what one interested blog critic has to say:
The very things she has been mocked for over the years—her ability to shift swiftly from topic to topic, her swashbuckling political rhetoric, her penchant for attention-getting—are what the online world is all about. She’s found her home in the blogosphere.
Walking into the offices of the Huffington Post, I have a dizzying flashback to 1995: It’s an airy dot-com loft that—unlike, say, Air America, whose corporate cubicles we’d visited that morning—feels exceptionally well funded. Bright Pop Art splotches adorn the walls. Twenty-five-year-olds huddle on sofas eating takeout. There’s an MTV-logo-shaped fish tank in the lobby and a massive portrait of Muhammad Ali and, of course, a pool table. (Adam Ash Blog 2006)
As a consummate networker and has somebody who keeps churning out books over the years Huffington has gained something of a brand name and being an 'early adopter' along with some financial backing and a business plan has helped her to gain an online presence and she is clearly trying to compete with established media forms. The reality is that if one visits the Huffington Post site it is rather more than just a blog but laid out professionally with tags across the top and a range of pages dealing with things such as entertainment, business etc. Huffington on today's visit has her latest blog comment posted., with enough of her own characterful interpretations of whatever to attract a certain audience. The 'blog' is effectively an online newspaper which provides a range of links to other news sources. The front page has developed an excellent Google weighting of 8/10. This is only one point behind the BBC Online News Front Page which is currently 9/10. However these figures could exaggerate the Huffington site's importance because of the way search engines work.
Google reportedly has over 200 parameters when it assesses the importance of sites and pages within them via is web-bots. One aspect that Google values as good web 2.0 promotion is lots of linkages. It may well be that a more detailed analysis of the Huffington Post pages shows strong attention to this, certainly as something which is more parasitic in terms of largely acting as a hub and organising links this site's importance in real terms could be exaggerated. It is quite obvious that the web weighting by Google of Huffington Post is skewed when compared with the BBC. I don't know if the BBC release their web useage numbers broken down to the public but as it is probably one of the largest sites in the world if not the largest with thousands of pages available online. I strongly suspect that being based in California Huffington has a couple of smart tecchies working very hard on web optimisation, probably from an SEO optimisation consultancy. This would certainly fit in with Huffington's overblown real world persona.
Chaffin reports that The Huffington Post relies almost totally on news collected from other links although he managed to find an example of somebody who managed to upstage the professional news reporters. The reality is that Huffington swans around and a bunch of minions who know something about specific areas such as fashion, business or green issues sort out linkages. There are a few other bloggers on the site who presumably are regulars. Some bloggers will write for nothing as guest posts into order to advertise their own blogs. I suspect this is what Huffington gets, success berreds success and it drives down the cost of her content:
Sell Your Guest Posting Services:
Most bloggers write guest posts for other blogs for free as a way to promote their own blogs. However, you can also offer your guest posting services for a fee. (Make money blogging)
If that is the case it largely bears out my theory that the best bloggers will get sucked in to something else. Some advertising is via Google and others appears to be sponsored links. The site itself is keen to get registered users and the temptation to become registered is increased by some web marketing which offes lots of freebies, but you need to register first to access information about these!
Overall then overheads appear to be quite low compared to the sites of conventional organisations, in that sense it is a sort of parasite as it appears to contribute little to the public sphere as such merely act as a sort of hub and as an advertising vehicle. Whether this will prove to be a feasible new media business model remains to be seen. My interests are firmly in the range of already existing news organisations which are already developing excellent web based and new media systems. If I want continual updates I can connect with an RSS feed anyway.
My own suspicion is that once the intitial palaver about Web 2.0 / Media 2.0 dies down, things will gradually default to the mainstream media unless people like Huffington can compete for the highest quality analysts currently employed by the BBC / Guardian / New York Times etc. This though would mean money to put people into the field otherwise it hard to discern what the Huffington Post offers that can't be gained usually for nothing.
Once the hype is stripped out of the notion of Web 2.0 the issues of having the time to undertake all this possible interaction becomes paramount for most people. As for the Huffington site, well venture capitalists are usually working to a tight business plan. Real world businesses usually take 5 years on average to move into consistent profit, and the Huffington Post has been going for three. When venture capitalists are involved they are usually looking for an exit at a very high rate of profit (Return on Investement or ROI) and they are not known for being altruists. As with much about the web there is much hype and speculation. They are probably trying to get the revenue streams and user figures up in order to exaggerate the value of the site and then sell it on to some other media firm making a quick exit. This looks as bad an investment as ITV for the long-term, I quite simply don't believe it. I've more confidence in Second Life.
Please note I haven't put a link into the site quite deliberately, I don't want to push it further up the Google rankings and add "virtual value" to what is largely puff.
This morning's Media Guardian is carrying an interesting article on yet another business model for the record industry in the digital era. You too can become a venture capitalist. Well at least it could be more fun than being an investor in Northern Rock :-). (Health warning this isn't a recommendation).
Blogs get the old-media habit. Joshua Chaffin Financial Times
Deals Pioneer Gets Second Wind. Joshua Chaffin in Patricof the venture capitalist behing the Huffington Post and other technology start-ups