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Summary:

Founder Henry Blodget tells New Yorker magazine that Business Insider’s audience is larger than many established financial news outlets, but the company also lost $3 million in 2012 or almost a quarter of its revenues.

When Business Insider founder Henry Blodget opened up about his website’s traffic and business model a few months ago, we noted that he didn’t reveal the most important thing about it — namely, whether it was profitable. And now we know why: a profile of the former Wall Street analyst by New Yorker writer Ken Auletta says the site lost $3 million in 2012, or about a quarter of the revenue it pulled in, most of which came from online advertising. So if there is a recipe for how to create a profitable online publisher, Blodget doesn’t seem to have discovered it yet.

Update: The Business Insider founder said on Twitter that the site turned a small profit in the first quarter, although he wouldn’t say how much.

Much of what Blodget says about his business to the New Yorker also appeared in the slide presentation he published as part of his experiment in “opening the kimono,” as he described it. The site has about 24 million unique monthly visitors, according to Google Analytics, which puts it ahead of traditional outlets like the Financial Times and BusinessWeek — although comScore says it only has 9 million (Blodget says the discrepancy stems from BI’s large non-U.S. audience).

On Twitter, Blodget called the $3 million worth of red ink that Business Insider racked up in 2012 an “investment” rather than a loss. According to the New Yorker piece, the site has only spent about half of the $13 million it has raised in financing, which came from investors like Kevin Ryan (Business Insider’s chairman and co-founder of the Gilt Groupe) as well as IVP and Marc Andreessen. Ryan tells Auletta that for $7 million “we’ve created the new Wall Street Journal.”

Although Blodget mentioned in his recent presentation that programmatic ad buying and other forces are putting increasing pressure on advertising returns for publishers, the New Yorker piece says about 85 percent of Business Insider’s revenue still comes from ads, with the rest coming from conferences and its proprietary research arm. The site has also been experimenting with various forms of “sponsored content,” including sponsor-focused slideshows.

Blodget describes the site’s approach — which focuses primarily on short, newsy pieces that often feature salacious details about and/or slideshows of celebrities — as being “halfway between broadcast and print,” and tells Auletta that it is designed to be “conversational.” He also argues that the model of aggregating content from other sites is sharing rather than stealing, although others have disagreed about that interpretation rather strongly.

And what does the future hold for Business Insider? An unidentified board member tells Auletta that he expects the site to be acquired, and Blodget says it “either will become part of a larger enterprise or become the larger enterprise.”

Bonus fact: Blodget, who played tennis while at the upscale Phillips Exeter Academy, plays doubles with his father — a successful banker — and the two were recently ranked nationally in the Super-Senior Father/Son Tournament.

Post and thumbnail image courtesy of Flickr user TechCrunch

  1. Ted Rheingold Monday, April 1, 2013

    Jeff Clavier taught me very early on, in a start-up EVERY expense is an investment … and he’s correct in saying so. You spend every single dollar you have towards achieving the biggest return possible for your company. So Henry is assuredly right in defending the negative operating budget as an investment. (Related: can’t believe I’m defending the guy ;)

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    1. Thanks a lot, Ted — that is a good point. And yes, I can’t believe you are defending him either :-) thanks for the comment.

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      1. I’ve traded email with Blodgett several times about BI’s penchant for discussing politics. In particular, how Blodgett and his left wing gang of “writers” nearly always take the left wing slant. The sensational headlines always seem to rip the conservative approach and promote the left wing agenda.

        This is 100% OK if your trying to become a left wing oriented website. Obviously, their are right wing sites as well. But, my advice to Blodgett was simple: if you want to alienate 50% of your potential audience then simply keep doing what your doing…

        A business site is playing with fire by promoting a right wing or left wing agenda. It’s frankly not very smart. I keep my personal politics out of my business because it’s clear that we’re a 50-50 country and I want both liberals and conservative customers.

        Henry responded by saying that they were trying to add more conservative views as well to keep everyone more satisfied…except the liberals were now mad and the conservatives were still convinced it was a left wing site. It’s the perils of touching politics…it’s not a smart move for ANY website seeking the largest audience possible. And nothing will get the blood boiling like politics. He’s lost a lot of audience and they aren’t coming back.

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      2. bralinshan, that’s a fair point across the board. That said, the WSJ seems to have the right-wing side of things pretty well covered (at least on the opinion pages), which are slanted very, very far right.

        I still agree with you, just pointing out there might be room for a counterpoint.

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  2. While I read Bi occasionally, I tend to avoid articles written by Blodget himself as they are invariably corporate-bashing screeds.

    It’s a good thing most of his readers are foreigners — they probably enjoy reading an American bashing American industry. However this American finds Blodget’s constant corporate-bashing rather tiresome.

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  3. “Ryan tells Auletta that for $7 million ‘we’ve created the new Wall Street Journal.’ ”

    a) He really said that?

    b) If so, does he actually believe that?

    c) Sample headline from today’s BI cesspool:
    “26 Time Management Hacks I Wish I’d Known At 20″

    Hacks, indeed…

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  4. Hampton K. Stephens Wednesday, April 3, 2013

    More proof that the ad-supported publishing model is vastly inferior to the subscription model. You just can’t make money like this if you want to publish content that is substantive or intellectually redeeming in any way. BI is failing even while mixing in vast quantities of sensational link bait with their more substantive fare.

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