The Secret to Digital Growth: Investing in Content?
Business Insiderâ€™s Henry Blodget tells (almost) all.
At FOLIO:, weâ€™re used to having to cajole publishers to share metrics to back up the case theyâ€™re making for their own success. Â
Kudos then to Henry Blodget (pictured right), CEO of financial news and analysis site Business Insider, who shared the type of proprietary financials that keep most PR heads up at night in a blog about the viability of â€śdigital newsâ€ť as a business. (The admissions come on the heels of Huffington Postâ€™s $315 million saleâ€”or as one talkbacker to Blodgetâ€™s post wrote, â€śThe headline on this post should be: Dear AOL, For your consideration, weâ€™re an excellent Web property too!â€ť)
The stats: Business Insider generated $4.8 million in revenue in 2010 (up from $39,495 a couple years ago), mostly from advertising. The company was profitable in 2010 (making $2,127), but Blodget warns it will dip back into the red over the next few quarters, due to aggressive investment, spurred in part by New York Stateâ€™s capital tax. â€śMaking $2,127 feels about 2,127 times as good as losing money,â€ť he writes.
The Costs Of Making Online Content a Real Business
While weâ€™re definitely in the â€śaggregationâ€ť or â€ścurationâ€ť age, many online startups are investing in staff and resources for creating original content (which is more than can be said for many of their peers coming from traditional media).
Blodget acknowledges the knocks against HuffPoâ€™s content (paying a few big name writers while plucking content from low-or-unpaid bloggers and generating SEO-bait) but he also says that with HuffPo expected to grow another $20 million to $50 million in revenue that it â€świll likely hire a lot more New York Times staffers to go with the ones it has already got. In other words, HuffPo will keep getting better.â€ť
Blodget doesnâ€™t reveal what heâ€™s paying to generate content, but says â€śWe didnâ€™t make that profit because weâ€™re a sweatshop, by the way.â€ť He claims a 25-person newsroom, (which is larger than many magazines which are generating far more than $4 million and splitting four or five peopleâ€”if theyâ€™re luckyâ€”across print AND digital).
â€śOur newsroom salaries for full-time employees, for example (which include bonuses and benefits) are now higher than at many companies in the traditional news industry. Because the digital news business is quite different from the traditional news business, we often promote from within, and weâ€™ve had the huge pleasure of watching folks who joined us as interns grow up to take leadership positions. True, we canâ€™t yet toss around the $300,000-$500,000 a year per brand-name columnist that Huffington Post and Daily Beast are now reportedly tossing around. But, in future years, if we keep doing what we think we can do, we should be able to pay our top people a lot more than we do today.â€ť
But whatâ€™s the cost of growing and getting better? According to Google Analytics, Business Insider has seen a steady rise in traffic, generating nearly 8 million uniques in February (comScore has it at 3.5 millionâ€”Blodget says he will address the discrepancy).
Meanwhile, financial blogger Felix Salmon estimates that expenses have been growing at the same rate as Business Insiderâ€™s audience (spending between 23 cents and 36 cents per unique visitor), and points out that Business Insider has moved away from producing premium content for Wall Street â€śelites,â€ť after realizing that thereâ€™s â€śno money in micro-publishing.â€ť
Many traditional publishersâ€”overleveraged and struggling to meet covenants or lose it allâ€”canâ€™t invest in content (or real lead gen or real marketing services, etc.) But for the restâ€”many of which are seeing improvements in print and boasting solid margins even through the worst of the downturn, and who HAVE proven there is money in micro-publishingâ€”continuing to operate on a shoestring across all media (even as they consider a metered model) will leave them wondering why business is going to a digital startup.