08.30.09

Can Yahoo Save the News?

As newspapers continue to struggle, traditional news-aggregation sites like AOL and Yahoo are planning to produce more original content. Are they the future of journalism?

Over the past several months, as many of the traditional pillars of journalism have begun to show severe economic strain, there are new signs of a growing future for original content on online platforms.

Early Internet portals like AOL and Yahoo, after years of describing themselves as only aggregators of other sources’ content, have now changed course and begun to build what might be the next generation of journalistic powerhouses. They have aggressively moved into the media space by becoming creators of original content in areas such as politics, finance and the economy, sports, food, travel, and music.

“We intend for AOL to be the largest publisher of high-quality content in the world,” said Marty Moe, senior vice president of AOL Media.

“We intend for AOL to be the largest publisher of high-quality content in the world,” Marty Moe, senior vice president of AOL Media, told Bnet this month. “Furthermore, we are a low-cost producer of high-quality content at scale.” Moe went on to say that AOL enjoyed “structural advantages” over newspapers, magazines, and television networks and was increasingly hiring refugees who have left those places over the past 18 months.

These latest moves come against the backdrop of a deteriorating situation in the traditional media business. The future of journalistic stalwarts like the Boston Globe, San Francisco Chronicle, Philadelphia Inquirer, and even The New York Times and Washington Post, has been threatened by the dramatic increase in free and timely news and information from thousands of Web sites, including these newspapers’ own online editions. With advertising dollars shrinking, people are wondering what news outlets will replace the papers. The moves to original content from the former kings of aggregation is an encouraging sign that some companies may come up with the business model that can support serious journalism.

Yahoo’s new CEO, Carol Bartz, who came from a tech background and is an unlikely advocate of content creation, told the Times this month that she will be investing in original content in entertainment, finance, and news, in much the same way as Yahoo already has in sports. She noted to the Times that there were a lot of available, unemployed journalists out there for the picking.

Sites like Politico, The Huffington Post, and The Daily Beast are all making the same bet: that there is value in original content in addition to aggregation and community, and they are starting to build businesses around that content. In many cases, they are also betting that there is enough Web and mobile readership to support advertising models so they don’t have to charge customers directly.

But invariably, their business models will not be the same. They will vary by the type of audiences they attract, and the unique characteristics of their content. If, for example, stock-market-information sites and sports-betting sites can offer their users actionable information in real time, it’s worth real money to their readers. In fact, they would rather fewer people see that information, to increase their own chances to act on it before others do.

Other very-targeted content sites—even successful ones—are seeing original content as a way to grow their audiences. Take, for example, Creditcards.com, on whose board I used to sit. Previously, virtually all of the site’s audience used to come from people using search engines to find sites that deal with credit cards. The business’ original content has drawn more people to the site, many of whom did not expect to look for a new card until they read an article.

There are two primary reasons some of these Internet aggregators may have a leg up on finding the ultimate business model for original content: 1) They already have experience giving audiences the kind of content they want on the new digital platforms; and, 2) They don’t have to support the legacy businesses, like print or broadcast, which have huge cost structures that are becoming less efficient as their audiences splinter off and require multiple distribution systems to reach.

“Principally, we have none of the legacy costs associated with producing print publications, “ AOL’s Moe told Bnet. “For example, we don’t own printing presses, or fleets of delivery trucks. We don’t have the elaborate editorial structures geared to producing products over a printing press.”

While this is all great news for proponents of original content, it's a shot across the bow of the existing media companies that continue to cut editorial and other content-creation assets as a way to stem losses. They are now increasingly in danger of losing their one advantage—the brand equity they have built as the “go-to” place for whatever category of content they dominate. These new players could have time to build up their reputations and take the entire business away.

Larry Kramer is senior adviser at Polaris Venture Partners, a venture-capital firm. He served as the first president of CBS Digital Media. Prior to joining CBS, Kramer was chairman, CEO, and founder of MarketWatch Inc. Kramer spent more than 20 years as a reporter and editor at the San Francisco Examiner, The Washington Post, and the Times of Trenton.