As I Was Saying About Web Journalism … a Bubble, or a Lasting Business? Ezra Klein’s decision to leave The Washington Post for Vox Media reflects the growing influence of new players in online journalism

As I Was Saying About Web Journalism … a Bubble, or a Lasting Business?

JAN. 29, 2014

David Carr

Last week, it occurred to me that the departure of Ezra Klein, the creator of The Washington Post’s influential Wonkblog, to join the young company Vox Media was a bit of a moment — an inflection point in the emergence of a news economy online. When I pitched a column about it, my long-suffering editor said, “Please don’t explain the Internet to people, David.”

What I ended up talking about in a column published online Sunday night was a generation of writers and editors who are building a discrete ecosystem of news that will host the next big brand names. It set off a variety of responses from “duh,” to ardent affirmations, but the question remained: Is this a bubble or a business on the make? Opinions are unlimited but print space is finite, so there is probably some value in going deeper into the notebook on this one.

there has been a rapid migration of capital and interest toward news coverage and analysis, which had been the odd man out for much of the tech boom. Is there a big and lasting business being built or simply a lot of to-ing and fro-ing by entrepreneurs and investors taking advantage of suddenly fast and loose cash?

The spectacular rise of Vice Media is partly what has turned heads. Vice, which began life in 1994 as a bawdy lifestyle magazine by a couple of guys out of Montreal, sold a 5 percent interest in August to 21st Century Fox for $70 million. That gave a value of $1.4 billion for the company, which produces a lot of news and entertainment and has content agreements with HBO, along with a growing online video business and an in-house advertising agency.

Now everybody wants to be Vice or be Vice-like, or have a piece of Vice. For the longest time, the founder, Shane Smith, talked about Vice becoming the next CNN, which sounded outrageous. Now that it is valued at five times what The Washington Post recently sold for, it doesn’t seem quite so silly.

Michael Moritz has worked in legacy media — at Time magazine — and now serves as chairman at Sequoia Capital, a Silicon Valley financing stop of first resort. He said he believed that both a build-out and a shakeout are underway.

“It’s a generational changing of the guard happening with greater speed than at any time before,” he wrote. “Afternoon and morning newspapers, TV and cable network news shows, monthly and weekly newsmagazines all had times when they reigned supreme. These days the reigns are briefer than ever because the march of technology has quickened to a trot.”

James Del, who is the executive director of the Gawker’s in-house ad agency and events business, says he sees both actual businesses and bubbles.

“The Silicon Valley machine that is used to billions in profits and spending billions on acquisitions is beginning to crash onto the media scene,” he said. “But it hasn’t been proven that if you throw money at these businesses it is going to work.”

“All that money and all that music is playing loud and fast right now, but I wouldn’t want to be looking for a chair if it stopped,” he added. “Some of the landscape is going to look like a disaster scene.”

As The Wall Street Journal pointed out, the digital pie may be growing, but the advertising rates are going down, spurred by competition among the many different sites. When I mentioned this phenomenon to Mr. Del and Jim Bankoff of Vox, both said that rates were dropping for commodity advertising, but insisted that quality, customized advertising on sites with good editorial content was actually a solid business with growing margins.

“By this point, we have relationships that go back years,” Mr. Del said. “Our advertisers know what we can do for them, if we deliver the right message.”

Kevin Ryan, one of the founders of Business Insider, said that the site has had nine consecutive quarters where the revenue per page was rising.

“This is not a bubble,” he told me. “There are fundamental secular trends behind it — ad growth, mobile growth, page-view growth — that suggest the large media companies of tomorrow are being created right in front of us, right now.”

On The New Yorker website, George Packer wrote that the bold future Mr. Ryan envisioned seemed to be long on hype and a little short on one crucial element: reporting. He worried aloud that if everybody tried to make a living by aggregating and explaining the work of others, a k a blogging, there would not be much actual reporting going on, and thus little left to talk about. (He did so in a blog post annotating the work of others, but we digress.)

You can’t hit all the digital news players with the same stick because they are not the same thing. Trend stories like mine lead to oversimplification, when, in fact, there are almost as many different approaches to digital news businesses as there are sites.

There are pure-play news sites like Re/code, the renamed, now-independent venture from Walt Mossberg and Kara Swisher. “We do good stories that are true and people want to read,” Ms. Swisher said. “That’s our advantage.”

There is The Verge, built on breaking news and original work; the site had dozens of reporters at the International CES this year. And Politico has taken a journalism-intensive approach to its expansion at Capital New York. (Itsmorning newsletter has been impressive and its worth will be tested next month when it starts costing thousands of dollars to clients who want to be in the loop.) Competing with these sites will take a lot of journalistic horsepower and significant investment.

There are also several well-regarded sites that use original reporting as a kind of a skin on aggregated, viral content. Gawker often kidnaps the work of others by putting its special sauce on top, but the site also breaks news and takes risks. BuzzFeed lives on listicles, but it has been hiring talented people, creating a global network and experimenting with long form journalism. The Huffington Post hosts a lot of link-bait underneath earnest, if partisan, news coverage.

And then there are sites that begin and end with aggregation and display of material meant to spread virally across the Internet. Upworthy is one of the fastest-growing sites on the web, multiplying its audience more than 10 times in the last year and reaching 87 million unique visitors in November using a clicky visual navigation and a progressive prism on current events. Upworthy has been amazing to watch, but it is in a vulnerable place to do business. As Alyson Shontell pointed out in Business Insider, the Upworthy formula is subject to cloning, meaning that competitors can crop up like fescue. Sites like Distractify and ViralNova use great headlines and very few people to register huge growth online as well.

I asked Eli Pariser, one of the founders of Upworthy, if he was worried about the attack of the clones and he said not so much.

“Our focus is on drawing massive amount of attention to important social topics — we actually never post stuff that we don’t think has some social value,” he wrote in an email. “To some degree, this means we’re fighting with an arm tied behind our back — we can’t, and don’t, capitalize on a lot of the most viral tidbits out there. But it also means there’s a strong core purpose that folks relate to, and that we believe sets us apart.”

And all of these sites depend on Facebook for traffic to a significant degree, which means that the social network could twist a few knobs and wipe out millions of referrals. It’s hardly far-fetched. So-called “content farms,” sites that repurposed information in very pedestrian ways, found out the hard way that Google giveth and Google taketh away; the online game company Zynga rode a Facebook wave until, well, the wave hit shore.

Scott DeLong, the founder of ViralNova, a one-man phenom, told The Wire, “This haunts me at night,” he said. “The short answer is I don’t know.”

But it’s not all about clicks and advertisers. A year ago, Andrew Sullivan’s The Dish set out on the seemingly lonely experiment of charging readers. The initial response was impressive, but getting renewals was the crucial test. Mr. Sullivan says the results have been very encouraging.

“The Dish just passed 89 percent revenue renewal this January compared with last January,” he wrote. “With a staff in single digits; and no office. We are already profitable.”

The taxonomy of news on the Web will probably re-array by the time you get done reading this — the phrase tl;dr comes to mind — but inside the bubble, there are the outlines of some new and lasting changes in how news is made, distributed and, in some cases, cashed in on.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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