Rafat Ali decided to join the panel for the last session at the Future of Business Media conference, and he mentioned how the focus of Paid Content is Finance, Media and Technology.
Finance, Media and Technology? Hmm… where have I heard that before? Oh, yeah:
Main Street Meets Madison Avenue, Wall Street and Silicon Valley is the tagline of the HipMojo.com blog…
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WatchMojo NewsletterI am at the Future of Business Media shindig, hosted by Paid Content, and they’re playing a video with Jim Cramer talking to Larry Kramer.
Jim Cramer vs. Larry Kramer is really more about subscription vs. advertising models, with Jim being the founder of TheStreet.com and Larry being the man behind MarketWatch.com
Incidentally, today marks the 10 year anniversary of Marketwatch, founded by Larry Kramer.
MarketWatch, formerly known as CBS Marketwatch, operated in partnership with Viacom’s CBS News. Once a publicly traded company, MarketWatch was 45% owned by Viacom and Pearson PLC before Dow Jones acquired it in January 2005 for over $500 million. It came in a flurry of deals where print media bought up online assets (the other being About.com being bought by the New York Times).
Today Marketwatch is part of Dow Jones, who in turn belongs to News Corp. News Corp., of course, is owned by Rupert Murdoch.
Talking to people here at the Future of Business Media and just doing a lot of listening to the panels, it’s amazing to see just how much respect and props Rupert Murdoch gets.
There are very few doubters that think that his FOX Business Network will eat away market share from CNBC and then some.
There are few doubters that think that Murdoch will not only generate synergies to justify the 63% premium he paid on Dow Jones but will make it up financially, too. In an earlier panel, Alan Meckler, CEO of JupiterMedia Corporation argued that Dow Jones’ online assets alone will make that deal accretive over time, and you know what, he might be right.
Today the WSJ network greets 17M uniques, between WSJ.com’s 10M uniques and Marketwatch’s and Barron’s 7M uniques.
Ten years ago, on October 30th 1997, it had been 11 months since investors turned a blind eye (or deaf ear) to Alan Greenspan’s irrational exuberance warning, in fact, the Dow and Nasdaq continued to rise from that until 2001, when the Nasdaq crashed from 5,000 to 1,200 and the subsequent 9/11 attacks eviscerated a lot of the stock gains made up to 2000.
In 2000, there were 7M traders vs. 2M today, yet despite this, finance remains one of the most sought after categories amongst advertisers, and that explains the drive to open up WSJ.com to the public to chase ad dollars…
Finance’s allure to marketers explains both the $5B sale price for Dow Jones and TheStreet.com’s rising market cap, which now sits at $390M (though just last week it was flirting with $500M, eerily close to Marketwatch’s exit).
Of course, $500M in 2005 is not equal to $500M today… in 2005, Marketwatch did $80M in revenue, that same year, TheStreet did $34M, in 2006, it did $50M. What will it do this year? I don’t know, but I think TheStreet.com’s lag relative to Marketwatch will forever be tied to the former’s decision to focus on subscriptions while the latter embraced advertising, something that TheStreet.com investor Fred Wilson recently touched base on.
Times change, market sentiment shifts, but sometimes, the decisions companies make early on come back to haunt them years afterwards.
Related:
Prices have been going up and number of deals have gone up. Will that change?
Alan Meckler, Chairman & CEO of JupiterMedia: Media Bistro hurt us in some ways, others expected same figure even if they did not have same business, revenue and cost structure… done over 500 deals and the main challenge after signing is entrepreneurs who say they get that things will change, but actually don’t.
David Levin, United Business Media: Prefers small deals to large ones… there are very fragmented markets and opportunities abound in those, he’s done 43 deals in past year alone. Companies and opportunities usually fall in: want it, fix it or sell it?
John S. Suhler, President, Veronic Suhler Stevenson: Veronis focused on middle and lower middle market ($150-250M range), more of a strategic buyer, not a financial player only: Do additional acquisitions to complement companies they invest or buy. Debt affects deal flow, for sure, so while the money is there, it’s slightly more expensive.
Lauren Rich Fine, Media Analyst: Tribune deal might be undone, but Reuters/Thomson probably won’t.
Steven Rattner, Managing Principal, Quadrangle Group LLC: There are deals of passion and deals of spreadsheets, buying newspapers right now fall in the latter… when Rafat suggested that companies buy newspapers for obvious reasons, Rattner is quick to add “what are obvious reasons people buy newspaper assets?” The reasons are not obvious, he states, referring to operating pressure. The Tribune deal showed that there are not really that many buyers (where only Sam Zell showed up). Of course, as a buyer, he’d say this to knock prices and expectations… Sellers don’t want to accept low enough figures to create safety net or margin of error as margins continue to shrink and revenues fall.
But really, here’s what I want to know: if and when Paid Content sells, which M&A bank will Rafat Ali hire: DaSilva & Phillips or The Jordan, Edmiston Group, Inc., who are Diamond and Platinum sponsors respectively?
Care to comment on that, Raf?
The previous panels give way to a Q&A between Rafat Ali and Reuters COO Devin Wenig.
The future is not a text-based wire, it’s multimedia. Text wires will be supplemented by multimedia, be it pictures, text, video, social networking that together tells a story. That’s the future of Reuters News, explains COO of Reuters Devin Wenig.
Reuters recently announced a merger with Thomson, and that is still yet to be final, but it is on track. Interestingly, Thomson is Canadian, Reuters is UK-based… will the cultures clash? I don’t think so, and I’m Canadian, so take it from me (the second part’s a joke, of course).
The most interesting parts of Rafat’s Q&A with Devin was his call that “you can’t be a media company if you don’t have video in some form,” yes, that’s music to my ears as one of the larger producers of made-for-web web video. Incidentally, when asked if Reuters will have video, he is quick to distinguish between TV and video. He is against the former, but all of the latter… In fact, he sees the future of media as:
- multimedia
- multiplatform
- monetized across the board.
Companies can no longer live in the boxes they’ve created for themselves in the past. Ultimately, all of the trends that we’re seeing in consumer media will have a big impact on B2B publishing and media.
Quite true. The guy seems quite on the ball, must be a Canuck.
Yes, once again, I’m kidding, I think.
Some time ago, I suggested (probably not alone) that the real danger to adult entertainment was not piracy but rather, user-generated content. As a web guy (I’ve ever worked in adult or anything), it was clear that a site like YouPorn would be a major threat to adult entertainment. What’s YouPorn? Think YouTube, for porn.
I am at the Paid Content shindig and I got a chance to meet some folks from Portfolio. What does Conde Nast’s $120M project Portfolio have to do with smut? Well, Portolfio has a fantastic piece on the site.
Turns out all of that porn could be yours for $20M. That’s how much the founder of the site, Stephen Paul Jones, wanted to sell it to Vivid Entertainment for.
Who knew? Other tidbits:
- site is growing 37.5% per month
- ad revenue is $120,000 per month
- Just nine months after going live, in September 2006, YouPorn was on pace to log about 15 million unique visitors in May, 2007.
- World’s #1 rated adult site when measured by traffic.
Turns out size matters, but not that much, Vivid passed on the deal. But this is more about Portfolio.com than YouPorn. Unlike so many of the stories in business media that are rehashes of press releases or simply a mouthpiece of management team members, this article really goes beneath the surface.
“It turns out there is a Stanford alum named Stephen Paul Jones. But he’s fortyish, not 27, and he lives in South Lake Tahoe, California, not Newport Beach.”
Read it all on the Portfolio site.
The fourth panel looked at advertising and asks “where should the advertising go” but that is almost like asking: who owns the Internet.
The panelists include:
- Peter Horan, CEO of IAC Media and Advertising
- Rob Norman, CEO GroupM
- Gloria Scoby, Senior VP Crain Communications
- Tad Smith, Reed Business Information
Staci Kramer was moderating the panel and came out with the question on a lot of people’s minds:
Is the advertising pie growing, shrinking and is there only one pie?
Peter Horan: What is the pie? Individual pieces that make up the marketing pie are shrinking but the total pie is growing.
Gloria Scoby: Crain sees more opportunities for partnerships, so in her opinion it’s cut and dry, the pie is growing.
Tad Smith: Events/Internet are up, print is going down. Interestingly, profit is not growing as media companies are seeing a major shift away from print and simultaneously investing in new media. Since costs remain high, that puts a lot of pressure on profit.
Rob Norman: Definitely growing but he’s “spending other people’s money”. As well, GroupM - while a 13,000 person and $40B agency - is the world’s largest buyer of interactive media (and one of my former clients).
A few interesting soundbites:
Norman comments that “it’s easy to know who owns magazines, but not easy to own the Internet. He’s right. I don’t know who owns the Web but it’s not media companies nor is it tech companies. But those two don’t like to coexist and collaborate because one thinks it’s better than the other and that creates bad partnerships.
Horan brings the focus to search: “Fork in the road was functional search, from question to specific content… we’re not in age of intent-driven media, alongside brand driven media. Today you ask a question and get a series of answers via search.” He adds: Search has shifted power to search and content owners, away from distributors of content. That’s true because search engines help consumers skip over the distribution points to a large extent, but portals remain key.
IAC hasn’t done very well in search, so it’s interesting to see the conversation head to search… clearly, search is on everyone’s mind, and seeing search get 40% of the online ad pie and Google command 40% of US advertising revenues, this is a recurring theme.
Smith has a very good point: for all of the talk about targeted [web] media being preferred comes the flip side: “If a Chief Marketing Officer can spend $1M on TV, $1M on print and $1M online, but with online you can see that it has a negative ROI, what do you do? What happens when you realize just how much of a negative ROI some campaigns get online. What will that result in? I don’t know.”
I guess ignorance is bliss. He has a good point, but I’d say how much greater of a negative does print, TV or radio “yield”? Of course, you know the expression, if you’re gonna be in the negative, go big!
Norman shatters the myth that marketers favor auction-based media planning. While I think auctions have a place in media buying (see the fantastic growth and success of Right Media, for example), what he says is true about big marketers: they “like uneven playing fields: Procter & Gamble likes to know that it has the biggest stick in the house and can do what they want with it.”
Ultimately, my two cents are simple: I don’t think web revenues will ever be incremental, they are cannibalistic. I touched on this recently on the launch of Hulu, just yesterday.
Wall Street Journal is one - if not the - strongest brands in business news. It’s so strong, that despite being in the increasingly troubled print business, its parent company Dow Jones (also publisher of Barron’s and Marketwatch) fetched a 63% premium in Rupert Murdoch’s $5B offer.
The company’s newspaper is doing fine, thank you; the website subscription business at WSJ.com has the strongest subscription business online, but let’s face it, while newspapers like New York Times and magazines like Forbes have embraced an open strategy and seen online advertising take off, WSJ.com has hitherto lost out on gaining any real meaningful exposure to online advertising, a $17B business in the US, and one that generated $10B in the first six months of this year.
Of course, that’s where Marketwatch and Barron’s come in, and it’s important to take a step back and really see what is underneath Dow Jones’ hood when one realizes what News Corp. will probably end up doing with its most recent acquisition.
Staci Kramer sat down with Gordon Crovitz, publisher of The Wall Street Journal to talk about the fine brand, the great company, and his new ambitious boss that commands such a grip in the global media business in the areas of film, publishing and web.
It’s worth noting that unlike a site like TheStreet.com that also adopted a closed, subscription-based model, Marketwatch went free and was ultimately the winner, selling for upwards of $500M to WSJ. At the time, some felt the deal was pricey, but today the site generates 7.5M uniques per month and a large percentage of pageviews.
WSJ.com gets 10M and the WSJ Network - which includes Marketwatch and Barron’s - gets 17M uniques.
I will say this: Crovitz seems very open-minded and goes against the stereotype of the clueless print executive, but that speaks volumes about the strength of WSJ’s online business. But that being said, he is keeping his cards close to his chest in terms of both News Corp.’s plans for WSJ.com, its partnership with CNBC and what integration Marketwatch, Barron’s and WSJ will have with News Corp.’s recently launched FOX Business Channel.
But while many people naturally assume WSJ’s brand will be leveraged to springboard FOX Business Channel, I personally think Marketwatch might be an easier fit for no other reason than Marketwatch has since its beginning and CBS pedigree (CBS was a joint partner in the site until WSJ bought it) focused on audio and video integration into a text-based site…
One thing, and I am guessing here, is that the inner circle of Rupert Murdoch has little idea what the right strategy will be with just how free WSJ.com should become, but what I see is that they will try a number of things and won’t really refrain from going all the way to ensure that in 1, 3, 5, 10 years, WSJ.com is commanding a healthy chunk of global online advertising revenues.
Raf just stepped up to me and asked me if the question we’ve all wanted to hear has been asked. Nope, I tell him, please do, and thankfully, he does:
When will WSJ.com become free?
“I think… first of all, as anyone who uses Google, or Paidcontent will know, a lot of paid content is available to non-subscribers… we all looking at the question of what is the ideal business model or journal content, it’s under discussion, we’ve had a hybrid model and are looking at increasing ability, as we’ve shown with a 25% growth in subscribers as we’ve added more content… we will see how much we need to go outside of the firewall and what the future holds.”
Part 1 coverage here.
I grew up reading business magazines: Fortune, Business Week, Economist and to a lesser extent Forbes. Then the Web’s explosion got me to read Fast Company, Business 2.0, Red Herring and company, so I was looking forward to panel #2 with:
- David Carey, publisher of Portfolio (Conde Nast’s $120M startup)
As a web guy, I wonder how long before Portfolio becomes simply known as Portolio.com. In other words, will Conde Nast drop the print for the web alone? I doubt that will happen in months, or even years… but at some point, will it really be sustainable to have a print magazine?
If anyone can do it, it’s Conde Nast, but this is almost like trying to make the globe spin in the opposite direction… and Carey knows it: “we’re a resource-rich, private media company and do things in our way.”
What do we read into the changes at Portfolio, asks Ali. “Every facet of our company is subject to scrutiny. Out of 150 people, 8 have left, but Gawker won’t look at the 142 that remained… but the 8 that left.”
Who knew Gawker would have more of an impact of Portfolio’s feeling of self-worth than Portfolio would have on Gawker’s, I wonder?
What’s the timeline to gauge success?
“A decade, that’s the metric used within the company, we’ve had success according to our goals: $20M net ad revenue, 700 pages of ads. We’re the only media company that likes to be in the magazine business… ”
He is right, some people will look at Portfolio cynically no matter what, and others welcome it. As a consumer, I love it.
- Susan Clark, The Economist
Clark describes The Economist not as a business magazine per se but a current affair one that reaches “a well and broadly informed audience which grew 15% in circulation and 22% growth in ad pages.”
The Economist does not have any global editions: one size fits all across all issues across the partner… is that good or bad I wonder? I don’t know what the answer is, but Clark stresses that it adds to the brand credibility and helps to know that an executive in NY reads the same thing that an executive in Hong Kong would.
“We have a high end audience, they read out of choice, not to get ahead in business.”
Interestingly, 85% get The Economist at home, “our readers open a bottle of wine, read it on a Saturday…” get plastered (Ali added the last part). I used to, but I didn’t uncork any wine, it’s just not appropriate to drink in the john.
I canceled my subscription, maybe the wine would have helped.
The content on TheEconomist.com is available for free for 365 days, then goes behind a wall, which in my humble opinion is backwards for SEO purposes.
- Keith Fox, Business Week
Will digital ever catch up to loss of print revenue? Yes, Keith Fox believes in BusinessWeek.com but liquid content is key. Business Week is “doing better than ever” though when I canceled my subscription (see a trend folks?) the magazine seemed pretty thin… but maybe, once again, that was the lack of wine…
- John Coten, Mansueto ventures
Fast Company and Inc were in bad shape when Mansueto acquired the brands, but revenues up 30% across brands in past year… Inc. for entrepreneur, Fast Company is for emerging creative class in business, they share different values from others in business.
Success of Mansueto’s assets “not as dependent on success of category, we don’t have huge and large audiences to sustain… we’re not all things to all people like other large magazines. Back then, the business community was an easily identified market, not anymore.”
So, so true. Which tied well with Ali’s question on how much or how little magazines should have community features, particularly since magazines are all about a community of readers with a shared interest.
Will WSJ go free? Read part 3.
Rafat Ali got the ball rolling at the big The Future of Business Media, quarterbacking a Q&A with rock star private equity banker Roger McNamee of Elevation Partners and Forbes.com CEO and President James Spanfeller.
Forbes.com has always been a leader or best practices case study for how established, successful and respected print media can blossom online. The company’s appeal has long been going away from hard core business pieces to include lifestyle bits.
Bear in mind, I’m a finance guy and I welcome Forbes.com non-finance and business bits. But, this is something that Rafat hammered away at: “some would say that you put images and articles on lifestyle to boost numbers,” suggested Ali… “and your point is?” countered Spanfeller?
“Well, if I were to put a picture of a naked girl on PaidContent.org it would get a lot of hits… but I’m not sure I would,” explained Ali… to which McNamee or Spanfeller replied: “I’m not sure we do that.”
Am I the only one thinking: “why don’t they?”
Anyway, McNamee “gets it” and in today’s crazy new media landscape simply means he understands that there’s a lot of things he does not get, and he’s honest enough to admit that… he gladly admits that planning three years out is out of the question, and by virtue of being a privately held asset, he can do that… of course, not sure he does much day to day managing, that, of course, falls on Spanfeller. And there’s no doubt that he clearly gets it because Forbes.com is firing on all cylinders.
Of note was the motif of old media companies trying to stick to old business models and their reluctance to release control. The margins in print were inflated.
Also covering the event, of course, is David Kaplan of Paid Content. Part 2 of our coverage here.
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