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.

@mathewi Don't have exact numbers yet (quarter just ended). More than we made in 2010 ($2k). Not enough to pay us like TV talent (sadly)

—
Henry Blodget (@hblodget) April 01, 2013

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.

Not "lost!" Invested! And, yes, about to fill out AARP card RT @emilybell @pkafka... BI lost $3m last yr, HB is 47. allthingsd.com/20130331/henry…

—
Henry Blodget (@hblodget) April 01, 2013

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

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If nothing else, the incident helps reinforce just how blurry the line is between plagiarism and sloppy attribution — and also how the the web makes it easier to provide attribution via hyperlinks, but at the same time makes it harder to define what is plagiarism or content theft and what isn’t.

To Jeremy Duns, who first blew the whistle on what he said was Thayer’s plagiarism, the case seemed open and shut: chunks of the article about North Korea and basketball, including a number of quotes, appeared to have been lifted straight from a piece by San Diego Union-Tribune writer Mark Zeigler on the same topic in 2006. And there was virtually no attribution of any kind in the original version of Thayer’s story, which appeared at the NKNews.com site, apart from one oblique reference to the Union-Tribune — and no links.

Is a small link to the source enough?

Even as Duns was writing his blog post about this incident of plagiarism, however, links began to appear in the Thayer piece, including a link to Zeigler’s original story. To Duns, this was evidence that the author was trying to cover his tracks, but in a comment to Columbia Journalism Review, NKNews editor Tad Farrell said that the lack of links was due to an editing error and that the site added them as soon as it could. Thayer vehemently denied that he was a plagiarist or that he intended to leave out the attribution.

So all’s well that ends well, right? In a follow-up post, the CJR’s Sara Morrison said that Duns clearly jumped to the wrong conclusions (since at least one of those who provided a quote that Duns questioned confirmed that they had in fact talked to Thayer for his piece). Duns wasn’t buying it, however, saying the attribution and links were only added later under protest. As he put it:

“Even hyperlinking to such a huge lift without mentioning the publication or author at all would have been something of a stretch – it’s a hell of a lot of material taken directly to cite with just one bolded word.”

Interestingly enough, Zeigler wasn’t all that satisfied either: although he said he wasn’t prepared to call Thayer a plagiarist, he didn’t think a couple of small links were enough to give him the appropriate attribution for his work. As he put it: “I don’t think just highlighting a few words of type in a different color necessarily qualifies as a proper attribution,” adding that his story “took a lot of work and a lot of man hours” to report and write.

The problem is that while adding hyperlinks is a great way of avoiding a charge of plagiarism — something that might have helped Fox News opinion writer Juan Williams and other alleged plagiarists — there is no accepted protocol for how or where to add those links, or how much content someone can cut and paste into their story or blog post without crossing the line from borrowing into plagiarism or copyright infringement.

How much content is too much to take?

This is also the root of the controversy over what some call the “over-aggregation” by sites like The Huffington Post and Business Insider, where large chunks of stories from other sites — and in some cases, the entire story or post — is published, along with a “via” link somewhere at the bottom of the post. Other blogs, including The Verge and Engadget, have been criticized in the past for burying links to the original source of the content they reproduce, to try and disguise what they have borrowed.

And if you broaden the lens even further, a similar problem is at the root of the fight that Google has been up against in country after country over its use of excerpts from news stories in Google News — stories that come from newspapers and other traditional sources. Germany has passed a law to control the use of such excerpts, even those as short as a single word, and in other countries like France and Belgium, those traditional outlets have sued Google to try and force payment for that content.

Google’s defence is that it links prominently to the original source, and this drives traffic to the publisher’s site, which is fundamentally the same argument that Business Insider and Huffington Post and others use to defend their aggregation of content. But those whose content is used argue, as Brian Morrissey of Digiday did in a back-and-forth with Business Insider founder Henry Blodget, that taking their content produces far more value for the aggregator than it provides in return.

So it seems that when it comes to making use of someone else’s content, linking as a way of providing attribution and credit is enough — except when it isn’t.

Images courtesy of Shutterstock / Zurijeta and Arvind Grover

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In his post at Digiday, entitled “Surviving the Media Aggregation Economy,” Morrissey argues that we are trapped in a digital-media environment based on boosting pageviews to draw more advertising, and that this has “taken publishers hostage.” Publishers like Business Insider, he says, have taken this approach to its logical conclusion and generate a lot of their revenue by repurposing content created by others. In one case, Business Insider posted a screenshot of a Digiday post along with a paragraph lifted from the original, and put a new headline on it. Says Morrissey:

“The result: It generated 224 pageviews for the Digiday story. Along the way, BI banked another 1,500-plus pageviews — and that many ‘welcome ad’ impressions along with multiple banners and a ‘native’ video ad. Meanwhile, Digiday’s original post — thought up and executed by our staff — got 2,500 pageviews. Is this a fair trade?”

It’s more efficient to aggregate than create

Morrissey goes on to note that Blodget likes to brag about how efficient his publishing platform is, and how his site gets an average of 180,000 pageviews per day per employee — orders of magnitude larger than many traditional media players such as the New York Times or Bloomberg. But the Digiday editor says much of this efficiency is driven by Business Insider’s repurposing of content created by others (Note: We’re going to be discussing alternate forms of monetization for content at our paidContent Live conference in New York on April 17). As Morrissey puts it in his post:

“Based on my experience, I can’t help but wonder if BI’s “efficiency” is bought at the expense of others. It’s like European countries bragging about low defense spending while relying on the U.S. to do the heavy lifting through NATO. It’s easy to be efficient when you draft off others.”

The debate expanded to Twitter when Blodget responded to Morrissey’s complaint, and suggested that if the Digiday editor was concerned about the screenshot of the images that appeared in the original, Business Insider would be happy to take them out. But Morrissey said his point was that the whole approach is wrong:

Business Insider argues Digiday should be grateful

Blodget argued that publishers like Digiday should be interested in exposing their content to as many different readers and potential readers as possible, and therefore Morrissey should be glad that Business Insider excerpted the post and included a link — something the Business Insider founder compared to a story that appears at Google News, or to the New York Times running a story based on a Wall Street Journal scoop:

Morrissey said that he was happy to have sites link to his content, provided they drove readers in substantial enough numbers, and that he was a big fan of the aggregation site Mediagazer as well as LinkedIn’s content portal. But in his post he noted that Business Insider had gotten close to 100,000 pageviews from content “aggregated” from Digiday, while the latter got a relatively minuscule 14,000 pageviews from Business Insider’s links.

Aggregation is a reality, whether we like it or not

It’s probably fair to say that versions of this debate have been going on for almost as long as the web has been around: questions about “link juice” and the “link economy,” in which traffic driven by an aggregator is supposed to make up for the alleged insult of excerpting their content, and so on. The Huffington Post used to be the poster child for what some have called “over-aggregation,” but now that mantle seems to have passed to Business Insider. And some believe that regardless of whether or not such behavior is legal or permitted under copyright law, it is unethical:

As I’ve tried to point out before, aggregation or curation is a fact of life in the digital age — just as record companies have had to learn to live with rampant downloading and sharing of music, publishers of all kinds are trying to get used to the idea that their content is no longer under their control. In some cases, aggregation fulfills a useful function, as it did in one notorious case involving a Forbes post by Kashmir Hill that was based on a New York Times feature. In other cases, the usefulness is debatable.

As Morrissey points out in his piece, until the financing model for online media involves something other than pure pageview-driven advertising revenue, aggregation is unlikely to stop. The only protection is to have content whose value can’t be summed up in a screenshot or a paragraph excerpt, and a relationship with your readers that is based on more than just how many pageviews you can generate. (Note: There’s a Storify of Blodget and Morrissey’s full conversation here).

Images courtesy of Shutterstock / Zurijeta

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There’s no question Business Insider has grown substantially since the last time Blodget opened up about his company’s performance: almost two years ago, he released some public numbers, and at that point the site — which was then about three years old — was pulling in 8 million unique visitors per month and had revenues of $5 million. The site even turned a minuscule profit in 2010, Blodget said, of about $2,000 (that’s not a typo).

In the latest update, the Business Insider founder says the site has boosted its traffic substantially, and now gets an average of 23 million unique visitors per month, or more than a million on the average day — growth that he says puts it ahead of giants such as Businessweek, Mashable and TechCrunch.

While that’s impressive, however, Blodget hasn’t provided us with some of the most important data a media company needs in order to prove its health: namely, revenue and/or profitability metrics. It’s probably safe to assume that revenues are higher than they were almost two years ago, or the site would have shut down by now — and they may even be dramatically higher, since pageviews and unique visitors are still popular measurements used by many advertisers to determine success.

But as Blodget himself notes in his presentation, the profitability of digital advertising has been plummeting over the past few years. The amount of advertising is still growing rapidly, and ad revenues are also increasing, but it’s a little like the Red Queen’s race in Alice in Wonderland: media companies are having to run faster and faster just to stay in the same place — every incremental pageview is worth less and less.

This is the same dilemma that almost every media entity is facing, from traditional players such as the New York Times to newer stars like BuzzFeed and The Huffington Post. Some of the newer entrants like BuzzFeed — and even the more entrepreneurial of the old guard, such as The Atlantic and Forbes — are trying to use more “native” advertising formats such as sponsored posts and marketing-related content to combat this problem.

It’s not clear from Blodget’s presentation whether Business Insider is doing much of this, although he does say that social “is not the be-all and end-all” for digital news sites, and that the importance of social as a referrer of traffic is “grossly overstated.” And it isn’t clear what the site is doing instead of social or native advertising — which makes it almost impossible to say whether the company is financially healthy or not.

Huge pageview or readership numbers are nice to have, but they are not enough for a business in and of themselves (just ask Tumblr, which has 20 billion pageviews a month and yet is still facing questions about its business model) unless of course you are planning to flip your business to someone much larger who already has a business model. Business Insider is going to have to answer those kinds of questions somehow, whether Blodget wants to tell us the answers or not.

Post and thumbnail images courtesy of Flickr / TechCrunch

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In case you’re unfamiliar, Techmeme is a must-read news aggregator for Silicon Valley types that also acts as a gold star dispenser for tech writers who vie to appear on it. Rivera, the site’s founder, is thoughtful and soft-spoken in person but comes across on Twitter like this:

Rivera has made an out-sized impression on tech journalism not only as an influencer but also for his use of robot-style publishing. Techmeme and its sister site Mediagazer both rely on online signals to determine if an article should appear and also whether to move it up or down the page. Only in the last four years has Rivera introduced human editors, based in time zones stretching from Bulgaria to Australia, to help the robots do their jobs.

At the event in New York, which was hosted by media company Outbrain, Rivera explained to Business Insider’s Steve Kovach why algorithms will never be able to curate as effectively as humans.

“A lot of people who think they can go all the way with the automated approach fail to realize a news story has become obsolete,” said Rivera, explaining that an article can be quickly superseded even if it receives a million links or tweets.

This is why Rivera now relies on human editors to shepherd the headlines that bubble up and swat down the inappropriate ones. He argues any serious tech or political news provider will always have to do the same.

Rivera is also not enthused about social-based news platforms — sites like LinkedIn Today or Flipboard that assemble news stories based on what your friends are sharing on social media. Asked if Techmeme will offer a social-based news feed, Rivera said don’t count on it.

“People like to go to the New York Times and look at what’s on the front page because they have a lot of trust in what editors decide and they know other people read it. We want to do the same thing,” he said. “There’s value in being divorced from your friends … I’d rather see what’s on the front of the New York Times.”

As for the business of Techmeme, Rivera says the site relies on three forms of advertising, all of which could be considered “native advertising” — the mantra now being preached in publishing circles. Specifically, Techmeme makes money from sponsored posts, job listings and event posts.

Finally, Rivera offered a frank and sanguine take on his plans to tune up his sites for the mobile age.

“I think the mobile site gets the job done but it could be snappier. We should do our own app. But we have 2 developers and one of them is me.”

(Image by Sarah Holmlund via Shutterstock)

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Abramson, who has been in the job for a year, made the remarks during a freewheeling interview with Henry Blodget at Business Insider’s Ignition conference in New York Tuesday. She offered a frank and confident appraisal of the Times and the evolving business of news.

In response to a question about how the Times divides up the newsroom between print and digital reporters, Abramson says most staff no longer fit into one category or the other. She does not oversee “the paper” or “the web” but rather a global product she calls simply “the news report.”

“There was too much focus in the past on the print product,” said Abramson. “[We] now make sure energy is 24/7 and not focused on newspaper deadlines and rhythms.”

This is a relief to hear because, from a business perspective, the Times has recently been relying on price hikes to its print paper to make up for cratering ad revenue. The price increases, however, provide at best a medium-term solution. Abramson acknowledged as much, noting that when she taught journalism classes at Yale, none of her students read paper newspapers.

Abramson’s pragmatism improves the Times‘ chances of developing the right longterm digital strategy which, for now, relies heavily on an imperfect paywall model. Her presence may also help the Times preserve its role as a news authority at a time when many once-mighty news brands are rapidly waning.

The interview also provided some personal color. Abramson, who grew up on New York’s Upper West Side with parents who had two NYT subscriptions, said she is regularly accosted by fellow dog walkers over the Times’ Sunday Review.

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Frommer will continue to write SplatF, he says.

@BradMcCarty Don’t worry, SplatF isn’t going anywhere.

— Dan Frommer (@fromedome) December 14, 2011

SAY reportedly paid $5 million for ReadWriteWeb, which has annual revenues of around $1.2 million and had 766,000 unique U.S. visitors in November, according to comScore (NSDQ: SCOR). ReadWriteWeb hasn’t taken any venture funding.

The New York Times (NYSE: NYT) will no longer syndicate ReadWriteWeb content, SAY Media spokeswoman Kristin Mitchell told me. “In fact, syndication on the NYT ended recently for all blogs,” she said.

SAY Media was created last year when online ad network VideoEgg acquired blog network Six Apart.

Release:

SAY Media Acquires ReadWriteWeb

SAN FRANCISCO – Dec. 14, 2011 – SAY Media today announced it has acquired ReadWriteWeb, one of the most popular and influential technology publications in the world, to anchor itsgrowing Technology channel that reaches more than 75 million global consumers each month. Founder and editor-in-chief Richard MacManus will continue to lead ReadWriteWeb as part of SAY Media’s rapidly expanding editorial team. In addition to ReadWriteWeb’s current staff, new star writers will contribute to the renowned technology publication, starting with Dan Frommer, founder andeditor-in-chief of SplatF, who will serve as editor-at-large.

“ReadWriteWeb has established itself as a leading news and analysis source for the tech community, reaching high-level business influencers and decision makers. Its editorial team is frequently sourced and considered to be one of the best in the business,” said Matt Sanchez, CEO, SAY Media. “As we looked to acquire a property that would further strengthen our technology channel, ReadWriteWebnaturally rose to the top of the list. Richard and his team are extremely passionate about the content they create and have worked very hard to develop a deeply engaged and informed community of tech enthusiasts.”

As part of SAY Media’s portfolio of owned and operated media properties,ReadWriteWeb will take advantage of the company’s proprietary technology platform, experienced ad sales team, and world-class design expertise to scale its business to reach more technology enthusiasts and decision-makers. Under SAY’s guidance, the site will continue to evolve through design and user experience innovations that align with SAY’s Clean Campaign vision, and also expand its editorial scope to appeal to a wider array of technology consumers.

“We’re incredibly excited to be joining SAY Media and believe this partnership will help us better serve our community of readers,” said Richard MacManus, founder and editor-in-chief, ReadWriteWeb. “With SAY’s technology and services we’ll be able to scale ReadWriteWeb in ways previously unavailable to us. We’ll now be able to expand our editorial scope into relevant areas of interest and redesign the site to create a more premium experience for both our readers and advertisers.”

This acquisition will strengthen SAY’s Tech channel offering by giving brands an assortment of custom advertising opportunities that leverage the influence and authority of voices like Richard MacManus and Dan Frommer and the reach of SAY’s broader network of technology properties to connect brands with engaged audiences. Current sites in SAY Media’s Tech channel include: Android and Me, Gear Patrol, gdgt, SplatF, TechDirt and more.

“ReadWriteWeb covers the tech industry with a high level of integrity and intellectual curiosity. I can’t wait to add my voice to the site, as I report on technology trends around the world,” said Dan Frommer, founder and editor-in-chief, SplatF and editor-at-large, ReadWriteWeb.

As SAY continues on its path to become the undisputed home of passion-based, vertical media properties, the company will continue to partner with, build and acquire sites that create quality content with a point-of-view and maintainvibrant, engaged communities.

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The round was led by new investor, Institutional Venture Partners, along with continued support from existing backers RRE Ventures, Allen & Co., Marc Andreessen, Gordon Crovitz, Ken Lerer, among others.

The new capital comes a little more than a year after the site raised a $3 million fourth round. The year before that, the site raised $2.7 million, though at the time it was estimated to be in the $5 million range.

Blodget did not offer any hints as to what sorts of things would be coming, though it currently has 60 staffers — pretty large by the standards of online news publishing — and it’s likely that it may add to the roughly 15 channels currently organized under the Business Insider banner.

In March, the company said it had reached profitability — $2,127 at the end of 2010, to be exact. So far, the company hasn’t released any other details about its balance sheet, aside from the one accompanying today’s funding, when Blodget noted that Business Insider does have money in the bank.

So how’s it faring this year? Like most media entities in this up-and-down economy, Business Insider’s the bottom line probably varies month-to-month and quarter-to-quarter. For example, the company’s Ignition conference at the end of November will probably make that month and December a profitable month (ticket prices start at $1695 for the two-day event). Given the economic times, Business Insider can still expect to break even this year, but the need to drive more growth over the long term will require continued investment in the business.

All in all, while there’s no denying the site’s popularity with tech, media and financial professionals, there are many in its audience that loves to hate it and — and some who just plain hate it.

One detractor is Marco Arment, who is recognized as one of the primary developers of the Tumblr’s platform and the creator of Instapaper. In a post on his personal blog, Arment charges that Business Insider has “they’ve linked to nearly every significant article I’ve written” and in many cases, “rewritten my titles to be more inflammatory and attract more clicks, which irritates me more than how much their cluttered, ad-overloaded site “design” buries the link to my article.”

He adds that Business Insider eventually asked him if he would formally allow Business Insider to publish his posts, offering him the chance of greater promotion for his work, but no direct financial compensation. Needless to say, he declined the offer, saying that the traffic referrals were negligible.

In any case, it’s that kind of intensely visceral reaction that keeps readers interested in whatever it is Business Insider is doing.

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