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July 13, 2017, 11:09 a.m.
Business Models

Henry Blodget: We’re “deeply underestimating how big digital media can be” in the next decade

“We are working in a medium, along with all of the other digital folks, in which you can tell stories in four different ways: words, pictures, video, audio. All of those will continue to grow for the next several decades. It’s not either/or.”

Many of the digital news organization that used to be called startups have outgrown the term — they’re established players by now. Among that group: the Axel Springer-owned Business Insider, which is turning 10. (Its Silicon Alley Insider brand officially launched July 19, 2007, though the earliest posts were a couple months before.)

The main site hit 50.8 million unique visitors this past May, according to comScore, up 15 percent from a year ago and placing it third behind Forbes Digital and Yahoo Finance in the business news sites category (Business Insider, like other sites with a distributed presence, disputes comScore measures as incomplete). Its research arm hit 7,500 subscribers the same month. And with a leg up from Axel Springer, especially in Europe, it continues to eye new countries for localized editions of BI.

“The digital media industry is just now hitting its stride,” Business Insider CEO Henry Blodget concluded as we were wrapping up an interview about the company’s goals as it hits the 10-year mark. “You will see a lot of brands over the next decade do extremely well.”

Some digital media companies, he suggested, are well positioned to grow as the television industry gets shaken up in the next decade or two:

I still feel that we’re still in the early years of what digital will ultimately become. What has happened to print over the past 10 to 20 years will happen to television over the next 10 to 20. That will create a big opportunity for big digital brands to make inroads. Not to kill anybody — nobody ever gets killed in the media business, they just get niche-ified. But all this change should create opportunities for some companies to get much larger than some companies currently think.

While Blodget kept a relatively tight lid on what BI would be up to this coming year, he and I discussed that muddled future, how its international expansion is going (14 editions outside the U.S. so far), the state of its subscriptions (“too early” to share much), and video (of course). Here’s a lightly edited and condensed transcript of our conversation.

Shan Wang: Let’s talk subscriptions first! The research arm seems to be going well. You’ve also started a paywall, and blocking the adblockers. Can you share any numbers on what your goals are for attaining subscribers from the consumer-side experimentation with the paywall and with the blocking-the-adblocker initiatives?

Henry Blodget: I think on a high level, there’s an ongoing debate about subscriptions or ads, with the idea being that one is the right model and the other is the wrong model. I think that’s misplaced. They both clearly work. It’s just a question of what kind of reader or audience you’re trying to serve, and whether ultimately you want to do one or both.

Our goal is always to have a dual revenue stream, so we have an advertising and subscription side, and our intention is to do both.

Wang: What’s the breakdown at this point, between advertising and subscriptions, and also factoring in the new consumer-side subscriptions you’ve added?

Blodget: Advertising is considerably larger. Subscriptions are growing more rapidly, although not that much more rapidly.

I’m not sure what we’ve said publicly and I don’t know what I can say. It’s many thousands of subscribers on the research side, and it’s just too early on the consumer side to comment.

Wang: So the paywall and adblocking response put in place last fall will continue the same way, with the same pricing, targeting the same users?

Blodget: We’ll continue to experiment with a lot of configurations.

Wang: Any patterns you’ve seen from these various configurations?

Blodget: Nothing I want to get into right now.

Wang: Okay. How about how the non-U.S. editions are going? Where else are you looking to expand, and what have you learned from launching previous editions that you’re applying to new editions?

Blodget: There are a few different approaches and we are using a combination of them, depending on the region and country. We’ll continue to experiment with the license model, where we have a local partner that hires a local editorial team that runs the business; we also have, for instance, a U.K. owned-and-operated entity.

Business Insider has 14 local country editions, about five of which are in domestic languages. We serve the rest of the world off the main site, and sometimes we’ll target advertising or particular content based on where readers are coming in from. There are a lot of countries where it’d make sense for us to do a local edition.

Wang: Are there things Business Insider has done in trying to launch in a new country or region that it wouldn’t necessarily want to replicate with non-U.S. editions in the future?

Blodget: I mean, what very much works, and what we try to replicate, is a combination of the editorial produced by the U.S. team of both video and text, and editorial produced in the same voice with the same perspective by the local team. That seems to be the best combination. Often we’ve found that international readers don’t just want local stuff. They do want what we’re producing about the U.S. and U.S. companies and the U.S. economy. Similarly, they don’t want just a U.S. edition; it’s helpful to have the local stories covered.

When we’ve done one or the other — have gone in and just produced local — that hasn’t worked as well.

Wang: How is the research arm factoring into the global editorial expansion?

Blodget: The intelligence arm is a global entity. We have a lot of international subscribers, but we don’t have international editions for that exactly. We haven’t, for instance, produced that in German or Japanese yet.

Wang: But you want to?

Blodget: Yes, absolutely.

Wang: How soon?

Blodget: Probably next year you’ll see some experimentation around that.

Wang: All parts of Business Insider, business and editorial, have benefited from the Axel Springer relationship. What are some other partnerships in the works, and what’s the day-to-day relationship like now between Business Insider groups and partners over at Axel Springer?

Blodget: Again, on a higher level: One of the reasons we sold to Axel Springer in the first place is that they have a deep background in journalism.

We knew relatively early on that we would ultimately be partnered with a media company. Right after the transaction, we had lots and lots of contact. Over the past year, the second year, it’s settled into a steady rhythm of board meetings and cooperation and Axel Springer, who runs all of its businesses in a way where they frequently bring folks together in Berlin or somewhere else, and we usually participate in those meetings.

Wang: Are they directing some of BI’s international expansion activities?

Blodget: They’ve been very helpful in Europe and for the most part, what’s been most helpful, is having a partner that’s been in the business for 70-plus years.

Wang: Editorially, are there new topics Business Insider is trying to build more coverage around, in this particular political moment?

Blodget: There’s a ton we’re not currently covering. It’s a question of year-after-year, being able to grow our editorial budget.

Over the next year or so, we want to continue deepening our financial coverage. That’s an area where subscriptions are particularly promising for us.

The new type of story that has been incredibly promising over the last couple of years is the growth of social video. When Facebook first opened up video, we and others assumed it’d be an extension of web video, which had been on site and on YouTube and elsewhere for many years. We’ve learned that no, this is a new type of story, with a different type of discovery, different user experiences, usually on mobile, usually in feed.

Once we started doing that, the scale of the audience was phenomenal, beyond anything we’ve considered was possible. So we’ve invested a lot of resources in that over the past couple of years. Our team is about 30 or 40 people just focused on telling stories that way. That’s become a huge business for us.

Wang: I saw your future of digital media slides from 2016 where you highlighted the promise of social video, and those slides start with the fact that Google and Facebook are taking most of digital advertising revenue. How do you square spending all these resources, and are you wary of Facebook?

Blodget: There’s plenty of worry about everything, always. But first of all, the idea that we’re going to a 100 percent video world is crazy. There are hundreds of thousands of stories every day that are far better told in text than in video. Video is just an opportunity unto itself. We are working in a medium, along with all of the other digital folks, in which you can tell stories in four different ways: words, pictures, video, audio. All of those will continue to grow for the next several decades. It’s not either/or.

In terms of the platforms, this is again something people are looking at in the wrong way. If you look at every other media business, there have always been distribution platforms and content creators. That is what’s evolving in digital, where you have Google, Facebook, Instagram, Snapchat. It’s very much a symbiotic business, where both sides are necessary. Our fastest growing revenue streams are coming from Facebook, Google, and others.

Those dynamics are important, but Facebook has been a wonderful partner, and we’re working very closely with them on midrolls, and a number of experiments they’re doing, including longer-form video. So no, we’re not worried.

Wang: Can you say more about the longer-form video you’re working on with Facebook?

Blodget: So Facebook is creating a section for longer videos than are typically served within the feed. They’re working with a lot of partners to develop that, and we’re one of them.

Wang: These will be news videos?

Blodget: Well…they’re nonfiction. I wouldn’t call them news per se.

Wang: So adding a lot of video, that’s not unusual. What has Business Insider been investing in that you think other media companies mostly are not but would be wise to do so? Things BI does that may seem against the grain right now.

Blodget: I still feel that we’re still in the early years of what digital will ultimately become. The industry is similar to the cable industry in the late ’80s, early ’90s, where we’d gone from people thinking that “Oh, this is ridiculous, there’s no room for anybody but the big three — why would you ever form a 24-hour cable news network, that would never work!” That was the early ’80s. By the early ’90s, people said ‘Oh, okay, they work, but they can only grow so big.”

Now, CNN is a huge powerhouse, and there are hundreds of cable networks doing incredibly well. That’s where digital is. We and others have proven it’s a business. Folks are still deeply underestimating how big digital media can be over the next 10 to 20 years.

What has happened to print over the past 10 to 20 years will happen to television over the next 10 to 20. That will create a big opportunity for big digital brands to make inroads. Not to kill anybody — nobody ever gets killed in the media business, they just get niche-ified. All this change should create opportunities for some companies to get much larger than some companies currently think.

Wang: If you agree with that thinking, investing in video now certainly would help.

Blodget: Ha. But in print, too. Based on what I’ve been hearing over the past few months, there’s this perception nobody is going to read anything anymore. Which is crazy. There are so many types of stories and information that are better in words or in article or infographic format. It’s much more convenient. Anecdotally, one of the things the industry has learned is that there are very few interviews people actually want to watch on video.

It’s much more compelling and respectful to readers to interview the person, write up the important things they said, and ship it out that way. Don’t make them watch a super long video.

And audio is a huge opportunity. It’s starting to be developed more proactively now. We’re going to find as podcast analytics become more prevalent, a lot of people realize downloads are not the only metric to pay attention.

We have a couple of podcasts we are producing regularly that are gradually building good listenerships, and we do think there’s an opportunity there. It comes from observing our own behavior as media consumers. There are parts of the day where we can’t look at anything and fiddle with our phones, and those are perfect opportunities for audio. We and others have an opportunity to fill those moments and it’s just a question of how we do that. We’re investing more in that, over the next year or two.

I still think the digital media industry is just now hitting its stride. You will see a lot of brands over the next decade do extremely well.

Photo of Henry Blodget by Digitas Photos used under a Creative Commons license.

POSTED     July 13, 2017, 11:09 a.m.
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