Profitable Online Media: They Won’t Be Giants

SYDNEY — To date, online media has tried to replicate the structure and processes of the major dailies. The harsh reality is however, that many publishers more closely resemble low cost, free weekly niche newsletters. That said, just what are the keys to profitable online publishing?

Like many of the other sectors of the Internet economy, online publishers have suffered by overestimating the economics of the Internet. That’s no more apparent than in the case of failed Village-Ten venture, Scape. In a bid to keep its web site fresh and relevant, Scape staffed its offices with a team of well-paid content people to update movie reviews and write romance columns.

Here, the nature and maturity of the online advertising market was not taken into account, nor the fundamental abilities of the Internet. One of the greatest resources of the Internet is community based content. – a technology and geek lifestyle discussion site – generates the overwhelming majority of its content through its readers.

The key to Slashdot’s success is clearly community. The site generates over 30 million page views a month and employs just 10 full time staff. Its overheads are furthered lowered via the use of open source technology. Compare this with Scape, who spent over $23 million on a web site that is based around a proprietary content management system by Vignette.

Another excellent example of profitable online publishing is The site rewards users who post rumours on layoffs or shutdowns via a points system. To date, the site has received 40,000 posts from its readership and become an essential source for many journalists, VCs and headhunters.

So essential in fact, that 860 people now pay an average of $US63 per month to access the entire database of rumours. That adds up to around $US55,000 in monthly subscription revenues. Coupled with banner advertising and the site’s revenue is by no means insignificant. That’s especially true when one considers that the only overheads are one administrative staff member, rent on founder Philip Kaplan’s loft apartment and salary.

A further example of economical publishing is It works by allowing users to suggest articles and issues to the editors, who then begin discussion threads on the topics. A quick glance at the site reveals that “in 113 days, Plastic’s 13697 registered contributors have suggested 12726 stories, 6411 of which have been published. These stories have generated 50572 comments.” Behind is 4 full time editorial staff and the same open source technology that powers

A difficult financial climate and an immature online advertising market have forced online publishers to seek alternatives from the old world print model, namely tapping into the power of its readership. As they say in the classics, “great businesses are made in bad times.”

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