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Oct. 24, 2016, 1:08 p.m.
Business Models

The New York Times is buying the gadget and technology review site The Wirecutter for $30 million

For the price, the Times is getting one of the real bootstrapped success stories in the past decade of digital media — and a toehold in a growing e-commerce revenue stream.

The New York Times will pay more than $30 million to buy the much-loved gadget and technology review site The Wirecutter, Recode reported on Monday (The Times is also getting The Wirecutter’s sibling site focused more on home appliances and goods, The Sweethome).

The Wirecutter was founded in 2011 by Brian Lam, an editor of the then–Gawker Media site Gizmodo, and has never taken venture funding. Its editorial mandate is meticulous reviewing, offering readers a small selection of only what its staffers deem to be the best stuff, and the site generates e-commerce revenue through affiliate links, getting a cut of the purchase price. The model was working: The site only posts a few dozen articles a month, according to a Bloomberg profile earlier this year, and is profitable. According to Lam, The Wirecutter drove $150 million in e-commerce transactions in 2015.

“A lot of these new companies, the mission is business: ‘We want to get as many eyeballs as possible,’” Lam had told Recode’s Peter Kafka in a podcast episode this past June. “It’s not, ‘This is what we believe and this is what we’re going to write about and this is how we’re going to help people.’”

From the Times release on the deal:

“We’re very excited about this acquisition on two fronts. It’s an impressively run business with a very attractive revenue model and its success is built on the foundation of great, rigorously reported service journalism,” said Mark Thompson, president and CEO of The New York Times Company. “The New York Times is the definitive source for news, information and entertainment and now we’re working on becoming an authoritative destination for service journalism, with verticals like Cooking, Watching and Well. The practical approach that The Wirecutter and The Sweethome take to product recommendations embodies the same standards and values that are the pillars of our own newsroom. Their service-focused guides align with our commitment to creating products that are an indispensable part of our readers’s lives,” Thompson added.

Following the acquisition, Mr. Lam will stay on in an advisory role, while Jacqui Cheng, editor-in-chief, and Christopher Mascari, product director, will remain in those roles. Ben French, vice president of NYT Beta, will serve as interim general manager and will work to integrate The Wirecutter and The Sweethome into The Times Company.

A brief statement from Lam on The Wirecutter’s site promises they’ll “continue to work hard to help you find great things to buy quickly and easily. But the real reason we’re joining up is so that we can do what we do better than we ever have before, with support from the world’s greatest home to journalism.”

The Wirecutter has partnered with the Times (as well as with other publishers) on product recommendations in the past. (Here’s one on choosing the right wireless router, which also appeared in the Times in print and was the most-emailed Times story that day. But note that the Times version of those recommendations lacks the affiliate links that The Wirecutter’s has.)

Digital publishers from Vox Media to Business Insider to BuzzFeed have been all over e-commerce (and Gawker Media — R.I.P. — was on board early). The Washington Post got some pushback at one point for “inadvertently” inserting an Amazon “Buy Now” button into the body of one of its stories, but it now includes Amazon affiliate links in book reviews without much criticism. (The Times currently includes multiple buying options, including Amazon, on its book bestsellers list, with affiliate links. But individual book reviews do not include any links to buy.)

Monday’s purchase will raise questions for some, at least, about whether the Times will now be raking in e-commerce revenue through affiliate links via Amazon, a company whose workplace it covered critically last year. But the Times has already been making headway with many new e-commerce efforts, including selling and delivering meal kits based on NYT Cooking recipes (and of course, you can always buy pricy items of questionable value at its online store). The Times’ move to buy The Wirecutter, though, contains echoes of the strategy it laid out in its most recent digital strategy memo from last October, which highlighted opportunities for the Times to offer useful information to readers beyond straight news.

The newspaper has always provided a significant service role — helping readers decide what show to see, what book to read and what apartment to buy — and we believe we can add even more value on mobile. The effort to modernize our service journalism began with Cooking a year ago. Our goal was to use our content and expertise to address a specific need for our readers: what to cook for dinner. With almost five million monthly users, Cooking has been so popular with readers that we are expanding this service approach to other areas starting with real estate, health, and film and television. Together these efforts aim to reimagine our features sections for the mobile era with the same vigor and creativity that we put into launching them in the 1970s.

The Times’ release did not make it clear the degree to which The Wirecutter’s content or brand would be integrated into the Times per se versus the Times Company more broadly. Does The Wirecutter become part of the tech coverage on, or will it remain structurally independent? If the Times embraces e-commerce revenue more broadly, one could imagine it applying to other sectors where the paper has an extensive review commitment — including books, movies, digital services, and more.

Congrats Twitter has been ablaze over the news.

POSTED     Oct. 24, 2016, 1:08 p.m.
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