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The cash handed over by AOL (NYSE: AOL) for the Huffington Post, and before that for the technology news site TechCrunch, has sent a frisson through content website owners of every stripe. The question on everyone’s mind: how can we get noticed in the same way? How can we cash out and become as rich as, well, if not Croesus, then Arianna?
Robert Peston, the BBC’s business editor, made his own calculation, which he revealed on Twitter: “Huff Post has almost 25m page views per month and is valued by AOL at $315m. My blog has 2.5m page views per month: I’d accept 10% of $315m.” No word yet on whether Tim Armstrong, the ex-Google salesman who heads AOL, has been in touch.
But there are no big UK content sites worth buying, are there? The UK doesn’t produce any big profitable content sites outside the newspaper realm – does it?
Wrong. All that the UK really lacks is a vast company like AOL or Yahoo (NSDQ: YHOO) that is prepared to wave a headline-making chequebook at such sites. In fact, the UK has a thriving ecosystem of original content sites that have been acquired by US companies, or UK companies, or which are making a good living on their own. The only difference is that, unlike US sites, they don’t receive much attention in the British media.
But that may have its own benefit: it will certainly protect them from the bubble-like hype building around content sites in the US, where the rush to a valuation and buyout (and cash-out) is palpable.
The UK, it turns out, has plenty of its own content sites that have earned widespread notice. Start with IMDb.com, the film database created in 1990 (yes, pre-internet) and bought by Amazon (NSDQ: AMZN) in 1998; it’s run by Col Needham, one of four founding partners of IMDb, from his Bristol home. Look at technology news site the Inquirer, set up by former computing reporter Mike Magee, and bought by Incisive Media, owner of VNU (itself a publisher of multiple computing magazines and sites) in January 2006 for a price reckoned by those in the know to be less than £1m.
Move on to Trusted Reviews (which aims to offer what it says on the tin):acquired by magazine publisher IPC in January 2007. Or DPReview, a digital photography review site, acquired – also by Amazon – in May 2007: at the time it had 7 million unique visitors reading 22m pages per month, having started as a hobby in 1998.
And then there are smaller sites being swallowed up in a series of deals by small UK publishers and aggregators: Net Communities has bought at least two technology sites, with backing from Hugh Chappell – who cashed out from the Trusted Reviews purchase. You can move on to Pocket Lint, Electric Pig and any number of small news sites, each battling to make an impression.
Amid all the noise about AOL’s purchase of the Huffington Post – which may well have been amplified because no American newspaper produced a competitor, unlike the UK where the Guardian’s Comment is free was very deliberately a response to HuffPo – the purchase, again by AOL, of TechCrunch, a San Francisco-based technology news site with 42 staff, got a lot of attention.
Yet, again, it’s far from unique. The UK has its own equivalent which has been running much longer: the Register – motto: “biting the hand that feeds IT” – which boasts 45 staff, including 21 journalists of whom two are subeditors. Who said online sites can’t afford subeditors?
Founded in 1994 as an email newsletter which then went online in 1998, it is now profitable (“very”, says Drew Cullen, one of the directors), and last November had 40m page views, with 5 million unique visitors. By comparison, Twitter, which has seen mumbles about a $10bn buyout, has just 20 staff – evidence, if it were needed, of how much more intensive effort content requires to produce than computing platforms.
The Register has thrived by expanding its coverage beyond the technology space – from which its audience, and its principal advertising revenue, comes – and into science, and bizarre tales. The tabloid feel can make it seem like an anti-authoritarian version of the Daily Mail; (LSE: DMGT) the comparison is relevant, because the Register thrives by bringing its own slant to stories. (Disclosure: I wrote for the site for a year as a freelance in 2005.) There, Apple’s iPad is called the “FondleSlab”; Google is “the Chocolate Factory” (as in Charlie and the …); Larry Ellison, immensely rich chief of Oracle, is always depicted up to his neck in a Photoshopped sea of money.
Surprisingly, Cullen thinks the key to building a powerful content site is not in chasing news. “News is vanilla,” he says. “Readers don’t come for the news – they come to a place to hang out. Otherwise, you’re at the mercy of RSS feeds and Google.”
However, Peter Kirwan, a media commentator who has worked for VNU and then created his own site, Fullrun, for marketing and communications professionals, thinks the dice are loaded against UK content sites. “The UK is centralised in many ways. Here, media [buying] agencies control a much bigger proportion of ad spend than in the US, where many more clients [advertisers] tend to supervise their expenditure themselves. This has pluses and minuses for new entrants in the UK (like bloggers). On the plus side, if you crack the agencies, you can do a lot of business. On the minus side, it’s very tough to get a foot in the door at UK agencies.”
Certainly the UK has seen the demise of some would-be content networks: Shiny Media, which started in 2004, had a high-profile set of investors but still went bust in 2009 having been hit by the advertising downturn.
Examples like that tend to scar people and leave high-profile tales of disaster, but they distract from the reality: the UK actually has plenty of people, mostly in private equity, who are looking to invest, says John Lettice, one of the co-founders (with Magee) of the Register. “There’s plenty of money available in the UK if you have a coherent business plan and something sensible to spend it on. The US may be more willing to invest in incoherent business plans, on the other hand.”
Having weathered the dotcom bust of 2000-2001, Lettice and Cullen are now confident of the site’s power, so much so that they are expanding into Australia, having already established a beachhead in the US where, says Lettice, “there is a value in being not-US on the other side of the pond. You get a certain cachet to the brand.”
Listening to Armstrong’s plans for AOL, and comparing it with those of the Register and the other small but tightly focused (and successful) UK content sites, the difference between a vastly funded organisation and one which is living from day to day on its own money is obvious. Armstrong talks of an “80-80-80” proposition, aiming at a demographic of women because “women account for 80% of domestic purchases, 80% of purchases are done locally, and 80% of purchases are influenced in some way by ‘influencer crowds’.” (Whether Armstrong is aware that doesn’t necessarily mean they all overlap perfectly isn’t clear.)
A leaked memo revealed by Business Insider says that by April he wants AOL to have increased its output of stories from 33,000 to 55,000 per month, with video making up 70% (rather than 4% now), pageviews per story to go from 1,500 to 7,000 and for 95% of the stories to be optimised for search engines.
It doesn’t look like what you’d describe as a call to arms for journalism; though the Huffington Post and TechCrunch together may help hit both the story and pageview targets, the optimisation target carries the anxious smell of a company that is reliant on Google to help generate its revenues.
Cullen is disdainful of such an approach – as you might expect from a company that was online before Google (NSDQ: GOOG). “Our core readers work in IT. This is a commercially attractive world, and we are commercially attractive, because of our community of readers.”
Google is not content sites’ friend, he thinks: “Content is not cheap to produce, and someone somewhere has to pay for it. Google sucks value away from content producers and diminishes their ability to monetise their efforts … Google has the eyeballs and it simply directs those eyeballs to wherever – and these may include link farms and press releases and crappily written articles produced by someone paid $12 an article.” (The Register’s payments are substantially higher.)
So what next after the Huffington Post? Perhaps nothing. Plenty of people will be watching it – and the deadly embrace of Newsweek and the Daily Beast – to see whether they can keep afloat in the US advertising market, which is being drained dry not only by Google but also by Facebook and Craigslist.
But for many small UK content sites, it simply won’t matter. They can make a living; and these days, that may be enough.
This article originally appeared in MediaGuardian.