publishing networks

espresso_book_machine_version_2The Espresso Book Machine, manufactured and distributed by On Demand Books,  has created quite a stir since it was launched a few years ago.  The book printing system has been compared to a “book ATM.”  It can print books, stored in a digital repository, in a matter of minutes.  Essentially, the system provides the capability to produce books at the point of purchase. 

Version 2.0, a smaller and more efficient version of the Espresso Book Machine is now available and is helping drive sale at On Demand Books.  In addition, the company has recently announced deals with Lightning Source and Google which give it access to a greater catalog of books.  The video below demonstrates how the Espresso Book Machine produces a book it has retrieved from a digital repository.

Google Books: Classic Books Available via the Espresso Book Machine

Dane NellerDane Neller is the CEO of On Demand Books LLC, which he co-founded with publishing legend Jason Epstein.  He has extensive operating experience in the retail sector as former President and CEO of Dean & Deluca for over 8 years.formerly.  Future Perfect Publishing interviewed him a couple of years ago, and he recently updated us on the company’s progress since that time and the outlook for the Espresso Book Machine.

FPP – Originally, mostly libraries were purchasing the EBM. Now it seems that more bookstores are acquiring the EBM. What do you think has caused the shift?

DN – Our primary market continues to be the University Setting both campus bookstores and research libraries. Independent Trade Bookstores also are buying as they recognize the value of localized self publishing programs being able to respond immediately to their customers.

Bookstores benefit as well from an increase in their sales per square foot, increase inventory turnover, derive new customer traffic to the machine, eliminate out-of-stocks and free up shelf space for faster moving, higher-margin inventory. For libraries, the machine enhances the academic experience for students/faculty and makes more books available to more patrons. By allowing the library to acquire a title for its collection on demand when requested by the patron, the EBM helps make the library’s acquisition strategy more efficient. Our technology also enables the library to reproduce rare books in physical form, provides a vehicle for University Press titles, and improves the inter-library loans process.

FPP– Have you begun to see interest from non-bookstore retailers?

DN – Yes, as they see the Espresso Book Machine enables them to add books as a new product line.

FPP – What’s the easiest way for publishers to make their titles available through the EBM?

DN – We are committed to adding content to our network and will accommodate whatever method is preferred by the publisher. There are three methods for publishers to make their titles available to us:

(1) Through our partner Lightning Source. This is our preferred way – publishers add their content to Lightning’s POD repository, and it becomes available through the EBM at the identical pricing offered by Lightning.

(2) By providing us with an API that allows our network to access the publisher’s digital repository – in effect, we “pull” the file from the publisher any time a book is purchased on one of the machines.

(3) By the publisher “pushing” their digital repository to us and allowing our servers to host their files. In this case, we host the publisher’s digital files and perform a regular reconciliation to keep the titles and their associated metadata up to date.

FPP – What does an EBM cost? Are there lease as well as purchase options?

DN – We sell the EBM for $97,500 plus the cost of the text printer (note that the EBM comes equipped with the full-color cover printer). The price of the text printer ranges from a little over $4,000 for the mid-speed printer (35 pages a minute – or a book ever 7-10 minutes) to roughly $28,000 for the high-speed printer (120 pages a minute – or a book every 3-4 minutes).

FPP – How do you anticipate the agreement with Lightning Source and Google will impact sales of the Espresso Book Machine (EBM)?

DN – Both Lightning and Google represent significant sources of high-value books. They’ve made the EBM more attractive to our customers and are helping sales.

FPP – What are the barriers to getting all publishers to sign on with ODB and what is the company’s strategy for growing the number of books available via the EBM?

DN – Distributed printing clearly is attractive to publishers who see the advantages of a greener distribution and sales channel. There may be some technical barriers on the publishers’ side to aggregate their printable files but most are creating or outsourcing Digital Asset Management repositories. Our strategy is to make our customers successful by going after content that will sell well through their setting. Academic content for the University Bookstore, for example.

FPP – Do you see a potential market for magazines, journals or newspapers using the EBM?

DN – Absolutely. The Espresso Book Machine will print, bind, and trim absolutely anything that a laser printer can print. In addition, customers have used the machine to print journals with personalized covers and lined pages, technical manuals, custom anthologies, professor-created textbooks, lab journals, study guides, coloring books, conference documents, corporate reports, recipe books, collections of (digitized) letters, and the list goes on . . .

FPP – E-books have been steadily growing in popularity. Do you see this as competition for the EBM?

DN – No. The growth in e-books has helped us in several ways. First, to the extent that growing e-book sales help publishers and booksellers, then we are helped, since these represent our partners and customers. More concretely, the digitization of backlist books for e-readers has made more titles available to our machines. Also, with the growth in e-books, publishers and retailers have grown more comfortable with nontraditional methods of book distribution, including our own.

FPP – What new features would you like to see in the next version of the EBM?

DN – We have no major upcoming changes to the EBM. In summer 2009 we began our full commercial rollout of the new EBM, version 2.0 (previously we had installed earlier-generation machines to test the market and the technology). At 3.8′ x 2.7′, the new 2.0 machine is half the size of the previous model. Interest in the machine has been fantastic, and we expect our installations to accelerate significantly in 2010, with an early emphasis on trade bookstores and the university bookstore and library market.

FPP – What do you see as the biggest challenges ahead for On Demand Books?

DN – Managing rapid growth is the biggest challenge. Other challenges relate to selling internationally. It is an exciting time for On Demand Books and our customers and we are very confident about our ability to meet challenges as they arise.

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Digital billboards may soon become the latest way to market books.  They are essentially like large TV screens that can be programmed to rotate video ads according to schedule.   Advertisers are generally billed based on the impressions they are likely to garner in a particular location.  They have been around for a number of years and have been shown to have more impact than their static, print based cousins.  So it is only natural that publishers are starting to experiment with this new advertising venue. 

According to the Southern Review of Books, from March 3 to 31, a trailer promoting the novel by Thomas Fitzsimmons entitled City of Fire (Forge Books) was shown on digital billboards operated by Adspace Networks in 105 malls in New York, Chicago, San Francisco, Houston and 35 other cities. Each mall has between four and 29 screens, for a total of 1,389, and the trailer runs a dozen times per hour on every screen.

digital billboards in mallMall advertising lets publishers bring their message in the form of a live action 15-second video right where people are and ready to spend. City of Fire is the story of Michael Beckett, a veteran cop in the Bronx, N.Y., who seeks to apprehend the person responsible for a string of arson fires. Fitzsimmons’ thriller is a mass market original. Forge is working with bookstores located in the participating malls to promote City of Fire, which went on sale March 3 with front-of-store visibility and floor display placements.

City of Fie book trailer

However, publishers may not want to be selective about putting book trailers on digital billboards.  Outdoor billboards have been shown to be highly effective at capturing the attention of drivers.  So effective in fact that a number of communities – e.g. Los Angeles – are now weighing ordinances to ban digital billboards because they represent a threat to highway safety.  Indoors, however, they could represent a whole new way to spur readers to purchase popular titles.

digital billboard outdoorThe jury is still out on how this will affect the overall sales of Fitzsimmons’ book;  so far, he says on a post on an Amazon community, his retail sales are good.  But in the future, digital billboards, like transit based video, could provide extra joice for book sales.  As digital billboards and signs replace their non-digital counterparts, it opens up an unlimited marketing venue for book trailers which comes with a ready made set of well understood consumer demographics.

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author-loftWhy do authors write?  They want a wide exposure for their ideas and stories.  Publishers have generally focused on playing the role of Darwinian gatekeeper for those ideas; determining which will live and die accoring to often opaque criteria.  This has been driven in part by the investment required to successfully produce and market a printed book in a few crowded and competitive channels. 

In an interview on The 25th StorySeth Godin chided publishers for misunderstanding their true role in the book industry.  He noted:

Publishing is far too focused on the pub day. The event of the publication. This is a tiny drip, perhaps the least important moment in a long timeline. As soon as publishers see themselves as marketers and agents and managers and developers of content, things change.

If they would help authors find that wider exposure for their ideas, and not be locked into the concept of printed books and sales in bookstores, they could leverage that intense desire and potentially be more profitable than they ever dreamed, he insists.  What would such a publishing model look like?  Here are some thoughts.

Author “lofts” – In a idea driven book industry, publishers provide online spaces where authors are encouraged to develop their content and build an audience around it.  As I have discussed before this could include, but not be limited to, blogging, building socials networs around content and carefully tracking the size, engagement and needs of that audience.  These lofts are essentially incubators for authors and could be dsigned to be self funding.  Not every author becomes published in the traditional sense, but they have a real opportunity to move their ideas forward.

Pyramids of values – Not every idea will (or should) become a printed book.  The ideas may be most effectively expressed in a blog, or best distributed in some digital form – e.g. widgets or e-books.  Or shared out on social networks.  Books are being delivered in chunks – via e-mail, on CD (ala the NetFlix model) or to iPhones.  Any of these idea distribution modalities can serve to create an audience. 

free-samples-of-foodFree (and sumptuous) samples – Just like fine cuisine, ideas should be sampled to be fully appreciated.  In the past, this has been limited to reviews, carefully controlled excerpts and author appearances.  However, the degree of sampling necessary to become a loyal member of the audience varies by individual.  This calls for broader and more flexible sampling tools – e.g. Google Book Search.  Google has settled the lawsuit with the AAP and the Authors Guild, opening the door to wider access to the content of books.  Despite the fears of the publishing industry, this will increase book sales, but it may reallocate the revenues.

new-star-formingAll of this is leading to a new concept of book.  It begins as a “digital haze” where consumers can sample content and publishers can see whether the idea should be promoted to a higher place on the value pyramid.  Some ideas will find their audience and may eventually form a (solid) core: a printed volume which represents to the consumer, author and publisher the highest expression of value.  Not every idea makes it all the way up this pyramid, but not every idea has to. 

As Godin points out, there are many ways to monetize ideas.  The key is to build an audience for those ideas by being creative in the way you develop, promote and manage them.

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Blog networkshave been around for awhile and represent a new form of online publishing – functioning as online magazines or newspapers.  In earlier posts, I have talked in general terms about how blog networks might serve as the foundation for a more open model of book publishing.  Now it’s time to talk specifics.

slush pileFirst, the rationale.  Publishing is risky business.  The biggest risk, and the progenitor of most other risks in publishing, is title selection.  Publishers have experiemented with different modelsin an effort to address this risk.  In the past, publishers have relied on the judgment and experience of editors or agents to act as gatekeepers to the publishing kingdom.  Sometimes celebrity status or previous publishing success serve as good rpoxies for judgment and experience.  And sometimes the title acquisition process is more subjective and opaque.  More often that not the results are less than satisfactory.

vote symbolAnother approach is to substitute voting for gate keeping.  How would this work?  Enter the blook network.  It starts with the premise that anyone might be a successful author; we just don’t know which ones.  So provide anyone who has a story, an idea or a manuscript the opportunity to try and find an audience big enough to be book-worthy.  The tool for this is a blog.  The publisher rents the writer space in a blog network with a style guide for blogging in a manner that makes it relatively easy to go from blog to book.  The rental also includes an appropriate set of metrics to track how the writer’s audience building efforts are doing.

Blogs on related topics are linked.  In this way, stronger established blogs help direct traffic to newer blogs.  Blog statistics are tracked by the publisher to determine which blooks are developing an audience.  When pre-established audience targets are met, the publisher is alerted and may decide to publish the writer’s work.  The publisher correlates audience statistics with sales data for books in the category (e.g. from Book Scan) to make the final publishing determination.  In this way, analytics guide the decision to make the publishing investment.  Since the blog has been structured to be easily converted to a book, time to market is faster.  Editors use metrics to identify the best content in the final manuscript, thus helping to ensure a more marketable product.

royalty checkThe blook network helps the publisher find authors who can build an audience sufficient to warrant publication.  And the discovery engine pays for itself (or even earns a profit).  Even writers who are not successful in terms of getting published will have useful information (in the form of metrics, reader comments, etc.) that they can use to refine or retarget their efforts.

The process can be summarized as:

  • Replace manuscripts with blogs
  • Replace the slush pile with a publisher’s blog network
  • Structure network blogs so their content can be readily converted into books
  • Combine blog metrics and book sales data to determine when and who to publish
  • Reinforce traffic to new writer blogs with links from high traffic network blogs

The benefits to publishers of using this approach are that it:

  • Creates added capacity for publishers to take on new writers without expense
  • Generates service revenue while the writer is developing an audience
  • Provides detailed knowledge of the market before the book is published
  • Provides a speedier path to market

The blook network is a potentially powerful tool for helping publishers better manage the risk of title acquisition and provide a firmer rationalization of their investments in editing, production and marketing.

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The idea that there are highly influential people who are trendsetters for the rest of us is very seductive.  So seductive, in fact, that it has held sway in marketing circles, in one form or another, for over five decades.  The media has picked up the concept by publishing lists of “top influentials” – e.g. The Atlantic magazine.  But this marketing orthodoxy is coming under greater scrutiny and being challenged by network scientists such as Duncan Watts. 

influentialFast Company, in its February 2008 issue, highlighted the new research and the ensuing debate among marketers in an article Is the Tipping Point Toast?by Clive Thompson.  The theory of “influentials” had its origins in the 1950’s with the work of Elihu Katz and Paul Lazarsfeld (authors of Personal Influence).  Its latest  proponents include Malcolm Gladwell (author of The Tipping Point) and Ed Keller and Jon Berry (authors of .Influentials: One American in Ten Tells the Other Nine How to Vote, Where to Eat, and What to Buy).    The influentials theory goes like this.  Target a sophisticated minority of  highly connected consumers (the “influentials”) and motivate them to talk up / recommend your product or service.  They will convince others to use the product or service and get a viral buzz going.

Duncan WattsDuncan Watts, a noted network theorist and author of Six Degrees, has challenged these long held beliefs with some new studies he has conducted while on sabbatical from Columbia University at Yahoo Research   His conclusion?  He finds that viral buzz is as likely to be started by poorly connected ordinary Joe’s and Jane’s, as by in-the-know hipsters.  What matters, he argues, is the readiness of the environment to accept the messages delivered, not the messenger.  In a receptive environment, a weakly connected individual can spread a trend as easily as someone with a large Rolodex.  Without that receptivity, even those highly connected hubs of society may be ineffective in a viral campaign.

Stanley MilgramHis findings were based on research that reproduced some of the original work of Stanley Milgram– arguably the father of the notion of six degrees of separation – except on a much larger scale.  Milgram had 160 individuals in Nebraska attempt to get a letter to a stockbroker in Boston by sending it to a colleague who they thought could get it one step closer to its final destination.  Only a small percentage of the letters made it to the stockbroker and these made the final step through the same three friends of the target.  Milgram concluded that the separation between strangers is generally 6 degrees or less.  Marketers concluded that the fact that the same three individuals appeared to act as gatekeepers proved that influentials were a critical part of communication among strangers. 

Watts’ study increased the size of the study by two orders of magnitude (61,000 participants) and used e-mail instead of postal mail.  He confirmed the six degrees, but showed that only 5% of the e-mails passed through hyper-connected individuals.  The bulk went through weakly connected participants.  He concluded that the apparent gatekeepers in Milgram’s study were a statistical artifact because of the extremely small sample size.  Watts has studied all sorts of human networks, from disease patterns to how rock bands become popular. 

So what’s the big deal?  Two things:

  • Advertisers and marketers are spending billions of dollars annually targeting so called influentials who they hope will spark viral campaigns
  • All of this money, time and effort may be wasted if what really matters is the receptivity of the general public to a new product, service or idea

One has only to think about the current presidential campaign in the U.S. to see how important Watts’ ideas could be.  In the world of book publishing, it may mean that we should find ways to gauge the receptivity of a market to a new author or title rather than hoping that some well placed book reviews will make the difference between failure and success.  Watts is the first to admit that some will find his conclusions counter-intuitive, but the science of networks and his carefully organized experiments appear to support them.  Relativity and quantum mechanics are counter-intuitive, but modern science and all the benefits it has bestowed would be impossible without these “unnatural” theories. 

Our intuition can be powerful, but it can be seduced and canalized by appealing ideas that don’t stand p under closer examination. 

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Jeremy Wright photoWe have often speculated that blog networks will play a key role in the future of publishing.  We decided to get an expert’s opinion and talk with Jeremy Wright, the CEO of b5 media.  ZDNet defines a blog network as “An organization that hires people to write blogs. It sells advertising and owns the blogs.”  With more than 290 blogs, 15 vertical channels and over 10 million unique visitors a month, b5mediais clearly one of the largest blog networks in operation today. 

Blog Marketing book coverJeremy Wright is a serial entrepreneur, some have even said a “blogpreneur” for his focus on communications-oriented ventures.  He is also the author of Blog Marketing, designed to help businesses figure out blogs, and use them to get into the conversation with their customers.  In addition to running b5media, he also writes the blog Ensight, a popular business and technology blog, and consults on blogging, communication, IT and time management.   

In our interview, Jeremy provided insights about the inner workings of blog networks and what he sees for the future of this nascent publishing medium.

FPP:  Technorati has indexed over 100 million blogs. Why do you think blogs have become such a powerful publishing medium?

Jeremy:  There are really 2 kinds of blogs (as far as I’m concerned): personal/family blogs and “professional” blogs. Personal blogs are really all about you telling your family how you’re doing, what you’re up to, etc.  In some ways, social networks like Facebook are starting to take the place of this kind of blog. But personal blogs are about expression, connecting with people you know and love, etc. For these kinds of blogs, this is the first time in history that we’ve been able to basically pen pal with everyone we care about, which is incredibly powerful. The second kind is “professional” blogs, which is really 2 camps: those who are blogging what they love and are good at (at least in part) so they can improve their career, establish new connections, network, establish themselves as thought leaders, etc. And the second kind are commercial properties which range from one guy writing about something to make money all the way to true blog-based content companies like b5media, Gawker Media and Know More Media.

FPP:  What is a blog network? Are blog networks like online newspapers or magazines, or do they represent a new type of media?

Jeremy:  In a lot of ways a blog network is like a magazine, just without the paper. Some networks, like Gawker Media, treat each blog as their own magazine (complete with editors, researchers, correspondents, etc). Others group blogs together and treat the whole as a magazine (this is how my company, b5media, does it). At the same time, they definitely represent a new form of media, as they really bridge the gap between mainstream media’s “we talk, you listen” metaphor and blogging’s “we talk, we listen” metaphor. It’s still commercial, but the best of these blogs (or magazines) are the ones that serve both metaphors: quality content, interactive conversation, by/for/with passionate people.

FPP:  Do blogs in a network intentionally reinforce each other with shared readership? Or do they operate as standalone media properties?

Jeremy:  The ability for a network to grow and establish a community of bloggers who are all passionate about similar topics (be it technology, business, entertainment or fashion) is really where the magic happens. Sharing strategies, linking to relevant stories across multiple blogs, drawing energy from the community… These are what make blogging at a healthy network so much more enjoyable than blogging on your own (which can often feel quite lonely). At the same time, the individual blog still has its audience to serve. So bloggers in a network are able to write for their audience, while drawing strength, inspiration and energy from the community.

FPP:  What do you believe are the key success factors for a blog network? Are there particular metrics you use to measure the effective of blog networks?

Jeremy:  The best metrics for any online company are the hard and fast ones: traffic, revenue and growth. But those don’t really speak to what it takes to achieve those key metrics. Each network motivates writers, chooses content areas and builds out the network differently. For us, we’ve always believed that if we keep writers happy, they’ll produce great content. And great content will mean more traffic. And with enough traffic it’s hard notto make money. So we focus a lot of energy on community and blogger happiness. We also regularly conduct surveys of our bloggers, our readers and our partners to see how we’re doing on the “soft” elements of success.

End of the day, a strong network has a strong editorial side with committed and energized writers, a solid business behind it, and talented folk to run technology, ad sales, marketing and admin areas.

FPP:  Many authors have successfully gone from blog to book. Do you think it is feasible for book publishers to set up blog networks to enhance and scale this process?

Jeremy:  That’s an interesting question. It’s not something I’ve seen yet, primarily because book publishers tend to exist to promote a book at launch, and then sit back and wait. The exception to this rule would probably be O’Reilly, which publishes a lot of information online, and encourages its authors to publish a lot of information online both pre and post-publication of the book. The idea of publishers getting into daily publishing is interesting, but it’s probably outside the DNA of all but the most technically-oriented publishers (where daily content is the norm). After all, if a publisher can’t do a weekly newsletter, can they really run 10-20 blogs, all with daily content?

FPP:  What services do blog networks typically provide the writers who work for them? What type of compensation models are currently used by blog networks?

Jeremy:  In terms of compensation, there are typically 3 types: revenue share (where the writer gets a percentage of the revenue the network earns), payment per post (often with a traffic bonus) and flat-fee (ie: like a contract writer would make). All 3 models work, though revenue share tends to put all the risk on the writer so is often used by networks when they’re starting out (to keep costs down). But, all 3 models can work. At b5media, we use a combination of flat-fee for meeting the writing requirements (which is kind of payment per post) along with a traffic bonus, though we’re currently evaluating new pay models. In terms of services, most networks really just ask writers to write and try and get them and their blogs exposure. I know at b5 we try and do as much as we can for our writers, ranging from free hosting for their personal blogs to training and from attempting to arrange press access for events to promoting the individual blogger in every way we can. It’s certainly one of the things writers should ask about before joining a network.

FPP:   What traits does a writer need to have to be effective in a blog network?

Jeremy:  I’ll defer to some of our most prolific writers on this, but in a recent training session, Leora Zellman and Mary Jo Manzanares said the most important things to have or develop were fantastic time management, to find your source of motivation daily and to both have your own quiet space and to reach out to other network writers so that you aren’t alone.

FPP:   Blog valuations and acquisitions have become hot topics recently. What factors does b5media take into consideration when evaluating a blog purchase?

Jeremy:  At b5media we have an internal engine we use to value a blog’s worth. We typically stay within range of that valuation when we acquire blogs, but sometimes there’s something that’s intrinsically more valuable than our model takes into account, so we don’t mind deviating. For us, traffic, revenue, unique visitors and subscribers are the key metrics. We’re able to gauge pretty successfully how well a blog will do over the long term with these metrics, so tend to stay pretty close to them. If it’s more of a strategic buy (we recently purchased a video platform company, for example, and are currently negotiating for a podcast network), then other factors may come into play that can bring the valuation up or down. As with any acquisition, you set your initial boundaries and then either go up or down based on strategic or external factors (such as a trend towards or away from text links, in the case of our most recent acquisition).

FPP:   Where would you like to see b5media in the next 3 years? Do you think book publishing is part of its future?

Jeremy:  While we might do a few e-books or encourage our authors to do books, I don’t think we’ll get into the book industry in a big way. I do see e-books as being a potential growth area, though. Beyond that, I’d like to see b5media move beyond the “blog network” box. We’ve started to do that a bit already by licensing our platform to Know More Media, doing ad repping, syndicating our content, etc. But we need to do more. I don’t want to get into specifics, largely because I believe talking before you have something to show is bad luck ;-).

FPP:  How do you see blog networks evolving in the future?

Jeremy:  Well you’ll definitely see more consolidation and more partnerships. The last year has already seen a dozen or so of these (we’ve led 3-4 of them), but the pace will continue to quicken as the larger networks are able to grow traffic and revenue more quickly than the smaller ones, the larger ones will simply pick up small to medium sized networks because it’s cheaper than building blogs themselves. Beyond that, you’ll continue to see a meshing of blog networks with social networks (9rules and Instablogs have started to do this, and our gateway release at will continue this trend over the next few months), and you’ll see more partnerships between blog networks and mainstream media networks (online and off).

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arianna huffingtonThe Huffington Post, the creation of Arianna Huffington, was featured in an article by Richard Siklos in the November 12 issue of Fortune magazine.  The article charts its rising acceptance as a media outlet to be taken seriously.  What was intriguing about the story, however, is that it outlines a path for next generation new media moguls.

Most traditional news organizations make big investments in the news-gathering areas of their business.  This is expensive and when ad revenues fall (or fail to grow fast enough to suit Wall Street), this is one of the first areas to be sacrificed.  Unfortunately, this also diminishes the product.  Old media institutions are slowly embracing blogs, but they still carry a lot of old media overhead with them.  The Huffington Post, however, operate with a different set of economics.  

It uses a large team of unpaid celebrity (and emerging) bloggers to build readership and concentrate the cash on editorial and management resources to maintain consistency and quality in the product.  Bloggers contribute on their own schedule and, according to Ken Lerer in an interview with USA Today, receive the benefit of the exposure, promotion and distribution of their work that a high traffic venue offers.  There have been some complaints in other quarters of the blogospherethat this is an unfair trade, but so far the bloggers at the “HuffPo” (as the blog is known), don’t seem to be too concerned.  This creates a virtuous cycle: name bloggers build traffic and readership, which in turn attracts advertisers.  And readership of the Huffington Post has grown rapidly. 

Today, the Huffington Post, which about two and a half years old,  has a paid staff management / editorial of 43 and a blogging staff of 1,800.  Monthly visitors range from 800,000 (ComScore) to 1.3 million (Nielsen / Net Ratings) and the site gets tens of millions of page views and hundred of thousands of comments each month.  And its credibility has shot up in the blogosphere and elsewhere.   Technorati ranks it number 5 among all blogs in the number of links from other sites.

Now enter the venture capital groups.  The HuffPo has received a total of $10 million in financing from Softbank Capital, Greycroft Partners and individual investors.  Though the exact amount of equity sold by the founders isn’t known, TechCrunch speculates that the deal could now make the company worth somewhere between $60 million and $100 million. 

While the ad revenues for the Huffington Post aren’t published, the company has created its own ad sales staff and is moving away from its ad sales partnership with Barry Diller’s IAC.  This is another indication that the company’s strategy is paying off.  Is the HuffPo the prototype for the next generation of news media? 

citizen kane photoIt may be a bit early to make that call, but certainly its open publishing model is something that traditional media should note.  It may be easier to morph from an A list blog to a news media success than the other way around.  Can true journalism flourish in such an open model?  I believe it can.  The rise of sites like the Huffington Post may mirror the early history of major newspapers. 

In summary, the playbook for next gen news media moguls might go something like this:

  • Build traffic cred with celebrity and emerging bloggers
  • Use the traffic to draw advertisers
  • Secure venture capital based on advertising revenue growth
  • Use the additional capital to strengthen your management team and expand your journalistic offerings

Good night and good luck!

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