Twenty Million Bucks to Build a Digital Network
After the initial rush of blood to the head about “blog networks”, we at Syntagma have settled into a cautious optimism about what I now call digital networks.
However, I’m sometimes accused of selling the “industry” down the river when I criticize common assumptions on these hybrid creations. I’d prefer to be realistic about the content business in general, and build out steadily from solid ground than snowboard on the pistes of popular enthusiasm.
So I’m always interested when a voice of real experience — in print and digital — speaks out on the subject. Jason Calacanis has been interviewed by Businessweek in connection with John Battelle’s Federated Media, a “repping company” which sells digital advertising space in return for 40pc of the gross.
First, how are blog networks developing?
” … three ways: everyone is doing [it], advertisers love it, and consumers have embraced reading them on a daily basis. … only two networks ever reached any scale: Weblogs, Inc. and Gawker Media. The other blog networks are not even close to the traffic of the two winners.”
That is undoubtedly true. We’ve seen many a quick, noisy startup fade noiselessly away. Why have so many failed?
“I think what’s happened now is the window for a network has closed as the top slots in gossip, tech, autos, video games, etc. have filled.”
I’ve been saying that for a while now. Look at Autoblog and Engadget and imagine trying to compete. So how many blog networks have scaled up?
“Weblogs, Inc. and Gawker are the two biggest. Nothing else even comes close. I mean, B5 Media raised some money [$2m] but can you name their top blog?”
How much would it cost to build a new Weblogs, Inc?
“It would take a $20M investment to build a network to compete with Weblogs, Inc. and Gawker. I don’t see anyone investing that much. So, I think the window is closed for a scale blog network.”
I totally agree with that and have been saying so for quite some time. For example, when we decided to aim exclusively at the big retail markets, even teaming up with a retail consultancy for a while, the costs of market drive were horrendous, with no guarantees of success.
We discovered a thick glass ceiling between being a successful mid-sized network and blasting into the mainstream with heavyweight, stable advertisers.
Syntagma Media had a few offers of creative partnerships to take the project forward, but my innate caution about bubbly markets made us turn away from them in the end.
So, what should be the future gameplan for a mid-market digital network like Syntagma?
1. Differentiate yourselves from the pack.
2. Drop all the nerdy names that go with the territory.
3. Forget “blog” network, become a digital network.
4. Replace blogs as a unit and talk about webtitles.
5. Never mind “channels”, carve out network magazines that everybody will understand.
6. Do this slowly and thoughtfully, not grabbing at the straws of fickle opinion from people with a vested interest in selling you stuff.
7. Above all, use careful cash-flow techniques to amass your strength.
8. Don’t sell your creation in bits for money that must be spent, however few the opportunities.
9. Back up the digital with a print presence so that each can support the other with joint projects.
10. Always aim to be exceptional.
You won’t end up with Weblogs, Inc., but then that always was a deceptive model, since it was built around a handful of powerful weblogs started when there was no competition.
But as publishers, both Jason and Nick Denton of Gawker have proved their worth, as you would expect from people arriving from the print world. What they also proved is that, ultimately, being the Next Big Thing is more trouble than it’s worth.
Update: Jason adds to his critique of the “b5 model” in a comment over at The Blog Herald : “b5 media has great people, and I donâ€™t mean to pick on them, but itâ€™s the wrong model. I know this because I tried it back in the early days of WIN.”
Strong stuff, but it underlies my points above that wide, blog networks need to evolve into something different to stay ahead of the game.
Update 2: Jeremy Wright has replied at great length to Jason’s critique of the b5 model. It’s well worth a read. “… the truth is that both Nick and Jason came at this as a publishing play. Which is fine. Thatâ€™s their background. Itâ€™s how they do things. Itâ€™s worked in the past, and it worked this time around. … When we started b5media, we didnâ€™t do it as a publishing play. We did it as a community play.”