What’s new in the news business? Money, apparently. And not just any money – venture capital money. The kind of money that typically chases high-growth start-ups with the potential to scale massively.
That’s certainly not the way most new journalism projects are described. But the money is coming in, nonetheless. As Quartz noted in a piece a couple of months ago, BuzzFeed has $46 million in funding, Vox Media $80 million, and Business Insider about $30 million.
“Our general view is that news is a growth business,” said Eric Hippeau, managing director at Lerer Ventures, which has invested in PandoDaily, The Dodo, PolicyMic, NowThis News, Circa, and elsewhere. “There are many more people are accessing and interested in and engaging with news today than ever before, thanks to technology. So we’re bullish on content and we’re bullish on news. Clearly, we have to pick the right companies. Not everybody’s going to be a winner.”
So what’s going on? And will this all end in tears? Perhaps, as this very smart piece at Venture Beat argues. But even if it does, there may well be good lessons to draw from what doesn’t work.
The article, by Nicholas White, Editor-in-Chief and CEO of the Daily Dot, effectively dissects the various areas where news startups – content-creation companies, if you like, rather than technology platform shops – and VCs are likely to disappoint each other: Upfront costs, time to build a brand, lack of easy exits, and perhaps most fundamentally, problems with scaling. Or at least, problems with scaling if we think of news and stuff that’s ephemeral.
There is a wide-ranging belief that the need for human talent on a daily basis means you’re on a cost “treadmill.” The underlying issue here isn’t really about talent—all businesses require talent — the issue is that the shelf life of the product is often days. In a tech company, what the talent produces stays fresh for 18 to 24 months.
White goes on to note that even a short shelf-life of news doesn’t mean a company can’t scale – only that it can’t scale massively.
But near-term sell-by date on the media’s product doesn’t mean the business doesn’t scale. And media scales just fine — as many companies show, viz. Buzzfeed or even the 163-year-old-and-$1.6 billion-in-annual-revenue New York Times (which you may have heard of).
It’s a smart argument – you should read the piece – and he’s nailed most of the issues. But why, as I’ve argued before, do we keep thinking of news as something that’s only good for wrapping fish the day after it’s published? Why do we keep thinking that what we produce is a story that lives in a moment in time, rather than the information – data, structured and otherwise – that powers those stories, as well as possibly lots of other “news products?”
I agree that news organizations are much less likely to be able to scale up quickly, if only because part of what they do involves slow-moving humans rather than quick machines. But that doesn’t mean we should handicap ourselves by throwing away much of what we do on a regular basis. Politifact, Homicide Watch and Connected China all build and keep data that has – at least theoretically – infinite shelf-life. And that should be value that scales over time.