I don’t want to get too deeply into this issue, but since I’ve been covering the NYT’s paywall and digital media generally, I thought this was worth discussing.
Remember those sweet ’90s when any high school dropout with a website could pull a few million in start-up investment? Well, true, things aren’t quite as crazy now as they were then, but things like AOL’s purchase of the HuffPo do make me scratch my head (AOL-Time Warner Pt II, anyone?).
This, for instance, is why:
About 35% of the HuffPo’s users come form Google. They land on cleverly optimized content: stories borrowed from other (and consenting) medias that mostly generate blogging and comments. This is the machine that drove 28m unique visitors in January, which makes the HuffPo close to the New York Times/Herald Tribune audience of 30m UV. With one key difference: each viewer of the NYT websites yields an ARPU of $11, ten times more than the Arianna thing. Based on the HuffPo’s valuation, the NYT Digital would be worth billions.
The Times, in fact, is not worth billions; or, at least, they’re not getting nearly that revenue from their web presence. (As an aside, all valuations of websites at this point in history are, to not put too fine a point on it, horeshit. There are revenue models out there that no one has yet invented, and others will be dead in 5 years. This stuff is all still very young, inchoate, and hazy.)
In my opinion, the Times has a much more legit business model–creating first-rate journalism (and third-rate book reviews)–than the HuffPo’s which is one step above an eHow-esque content factory. (And see the above link for some fascinating tidbits behind the scenes of HuffPo.) I don’t doubt that there are genuinely worthwhile content strainers out there (yours truly attempts to do his humble part, along with some worthwhile original content), but what The Huffington Post does is more akin to a fire hose than a strainer. As users and search engines get more savvy, I don’t see this kind of business model sticking around.
Nor do I see it being a source of great revenue. The Times could make a legitimate case to charge for what it does–you can’t get what the Times does anywhere else. That’s not true for HuffPo. And I think the audience that the Times has built can be monetized in ways that HuffPo’s never will.
There’s a certain point when you go from taming the chaos to just being another part of the chaos, and HuffPo has passed that point. In fact, that’s its whole version of success. I’m not sure what AOL just bought, but at this point in history I’m not counting on AOL being a savvy player in the Internet game.