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May 30, 2012, 2:30 p.m.
Business Models

Jeff Israely: To B2B or not to B2B, that is our question

Our startup correspondent, building Worldcrunch in Paris, reports on the twin temptations of building a business around serving consumers or other businesses. Or…both.

Editor’s Note: Jeff Israely, a former Time magazine foreign correspondent in Europe, has launched a news startup called Worldcrunch. For the past two years, he’s been describing and commenting on the process here at Nieman Lab. Read his past installments here.

In 2011, when we launched our site, the focus was on building our product. Now, the next stage in the startup climb is to build the business.

As the editor, I still spend the majority of my time on the product side: helping to pick, produce, and package our news content in the best old and new ways possible. But I am also busy working with my business partner Irène Toporkoff on the essential how-to-make-the-product-make-money piece of the puzzle.

It’s the first time for me on this side of slowly crumbling wall separating business and editorial, and it’s a whole lot of fun. It’s also a whole lot of hard work, made harder by the fluid and fraught state of our industry, the changing habits of news consumers, and the very fact that we are indeed a startup, with limited means and constant choices between the possible and the practical. There’s an extra dose of awareness in the Worldcrunch pit of what we can call the Miles Davis rule of business: what you choose not to do matters just as much.

I know that folks in much bigger news organizations are grappling with some of the same choices and pressures. Stakes are high, budgets tight, time short.

Over the next three posts, I will try to unpack how it looks from my particular vantage point in a miniseries I will presumptuously call The False (And True) Dilemmas In Finding Your News Industry Business Model — laying out some of the big opposing choices our fledgling news company faces: B2B vs. B2C; paid vs. free; content quality vs. content quantity. Of course, as the title suggests, there’s plenty of spillover within and across these apparent alternatives, not to mention over that once mighty wall. So let’s talk business!

Until two years ago, B2B (meaning business-to-business) didn’t mean much more to me than those yellow pages that didn’t arrive at my home — or office.

The first time I met Irène for coffee to tell her about the project (mostly the product, as it were), she took it all in, asked lots of questions…and had this to offer as her first full affirmative sentence: “B…to…B.”

She had both bought and sold digital content at previous jobs, and she knew that — particularly online — it is still easier to get a business, rather than the equivalent individual customers, to actually pay for something. It would be, Irène explained, B2B2C…business-to-business-to-customer/client.

The alternative path is to simply aim straight for the C. Be a destination site, build your brand, reach the consumer! Soon enough, we realized that this is still the big prize. It not only plays to our own sense of mission (and vanity), but also just seems like more fun: pursue your vision rather than sniff out the market and be forced to react to the needs of intermediary third parties. If we post it, they will come.

Anyway, those were — and are — the two choices of this true-and-false dilemma. And people (including potential investors) continuously ask whether we will be B2B or B2C. Timidly at first, and now with confidence, we say both. The B2B is a way to find revenue in the short term, while the brand grows and the B2C model reveals itself to us and the industry as a whole.

Of course, pursuing both is neither easy nor simple. Indeed, it’s the implicit tension in many of the week-in, week-out choices we have to make, on both the business and editorial sides. A decision to focus on selling Article X to third parties may force us to forgo investing in some technical or human tools that could help us push the same article directly to readers. It also finds its way into our editorial choices: We might actually end up producing Article X rather than Article Y, which would have been better suited for our own site and our search for readers.

Major news organizations are also weighing the dilemma, as the old models fade and new opportunities present themselves. Reuters, traditionally a B2B and B2B2C outfit, wants to become more and more a direct source of news for consumers. The New York Times, which has always banked on readers reaching directly for the brand, is committed to its global syndication business as a steady source of additional revenue.

Nieman Lab columnist and news business guru Ken Doctor recently encouraged media companies to pursue lots of little golden eggs of revenue, now that the historical twin rivers of advertising and circulation are turning to smaller streams in a much more crowded information ecosystem.

Two years after that first meeting with Irène, and one year after going live on the website, we have built a nice little chunk of loyal readers who offer a mini egg of ad revenue — which nonetheless will alone clearly not be enough to build a business around. So we’ve just begun to sell our stuff to other media outlets. The potential syndication revenue is real, though may ultimately be more modest than we had once hoped. It also must be built one deal at a time, which requires run-up time and investment into sales operations, and/or working with third-party syndication services that take a major cut.

Where things stand today, in a world of digital pennies, there are clearly still some nice dollars to be made in print licensing. But what is equally clear is that the future is indeed digital. So your legwork and brainwork — your strategy — should be geared toward that future.

Being a digital-only venture, we don’t have the monstrous dilemma of weighing what to do about our own print product. And yet we are (in a number of ways) part of the bifurcated world of the mainstream media. How important are those print dollars we can gather now? How long will print even be around? Should we focus instead on emerging digital syndication possibilities? Or should we move away, as much as possible, from B2B altogether?

As a Paris-based, French/American company looking to get our business rolling, we’ve had the good fortune of getting introduced recently to a successful U.S.-based French entrepreneur, Thibaut de Robien, who wants to work with us on both business development and our overall strategy. He is now busy pounding the pavement stateside and joining Irène and me (via Skype) on the hard thinking about these tricky choices we face.

One of the many strengths Thibaut brings is the very fact that he comes from another industry: online gaming. Beyond his know-how around digital user experience, his battle scars in a decade of actually finding a new business model for an existing product is a great asset for a news startup.

B2B or B2C — for us, for now, it’s both. It’s what one smart businessman said he likes to call “holding up some gas stations on the way to robbing the bank.” That’s the startup’s outlaw spirit we like. But building a new company from scratch is also about being ferociously pragmatic — which we might also call preparing to thrive tomorrow by perfecting the art of surviving today.

Photo by Jeremy Brooks used under a Creative Commons license.

POSTED     May 30, 2012, 2:30 p.m.
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