What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital Journalismsuccessful of these sites, with a monthly audience of more than 700,000 uniquevisitors. Smith won’t say when the company might turn a profit, but his formuladepends on pulling together sizable audiences at minimal cost—each site has justtwo journalists, with ad sales and administration centralized.Henry Blodget’s Business Insider site is pursuing a similar strategy, on a muchlarger scale. Blodget has disclosed financial details about his media company, reproducedbelow, in what was an unusual move for a private firm. 10 “We’re a privatecompany, and we’ve never disclosed any of that stuff, either. But I’m honestlynot sure why,” he explained on March 7, 2011. “So we’re going to try an experiment.We’re going to disclose that stuff. Then we’re going to see if somethinghorrible happens to us.”Business Insider’s intimate financialsFeb Dec Dec Dec2011 2010 2009 2008Site traffic (in 1000s)Estimatedmonthly uniques 7,800 6,000 2,600 2,000Financials ($, 1000s)Gross revenue 4,800 2,000 700Expenses 4,798 2,375 1,300Operating income (loss) 2 (375) (600)SOURCE: Business Insider, March 7, 2011, and Henry BlodgetThe statistics tell an interesting story. With 45 full-time employees, including25 in the editorial department, Business Insider is hardly a grass-roots effort. In2010 it cost almost $5 million to run. But unlike many sites of similar size, BusinessInsider managed to turn a tiny profit in 2010—about $2,127, or as Blodgetput it, about enough to buy a MacBook Pro.One factor accounting for Business Insider’s survival is that the site targetsinvestors and financial professionals rather than a general-interest audience. Butthat also means it must fight for readers and advertisers with the rest of the financialpress, including giants like Bloomberg and Reuters and lower-cost sites likepaidcontent.org and Breaking Media’s.Dollars and Dimes: The New Cost of Doing Business 99
The Story So Far: What We Know About the Business of Digital JournalismThe biggest difference between Business Insider and a similar site that doesn’tbreak even is traffic: Blodget’s venture managed to pull in 6 million unique visitorsa month by the end of 2010, about double its audience of a year earlier. ByMarch 2011, Business Insider had almost 8 million visitors, which represents a 30percent jump in just three months. If the site becomes truly profitable, it will beby virtue of having continued that growth—getting to an audience of 15 millionto 20 million visitors each month while keeping expenses flat.The example of Business Insider suggests a provocative comparison with theold-media world. In the newspaper industry, a rule of thumb has been that every1,000 additional readers justifies an additional newsroom employee. Going byBlodget’s numbers, the comparable figure in online news media is closer to oneperson on the editorial staff per 150,000 readers.As far as costs are concerned, then, the real advantage of digital-only operations,from The Batavian to Business Insider, is that they don’t have to “tradedollars for dimes”—they are natives of the dime economy. By contrast, legacynews outlets must navigate a tricky cost transition when they go digital, cuttingexpenses and boosting online revenue while minimizing the damage to the traditionaladvertising that still sustains them.This process begins by learning how to get the most out of their newsroomsin each medium. At the Atlantic, Justin Smith says, cost efficiencies depend onemployees working across the digital/print divide. “There are very few employeeswho don’t do both print and digital work,” he says. “Maybe a couple of factcheckersand one senior editor who concentrate on long pieces. We have about60 people in editorial, and 99 percent of them are completely integrated.” Inadvertising sales, all salespeople sell print and digital.The Atlantic got a lot of attention in 2010 for having become profitable (“atidy profit of $1.8 million” 11 ) for the first time in decades. But the numbers disclosedwere for the company as a whole, including print, digital and events. Still,Smith insists that the company’s move to profitability depended on containingcosts on the print side. “We were brutal about shifting resources away from print,”he says. The company made layoffs in both the editorial and ad sales departments.100
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