Turning Politics Into Cash
Amid a continuously awful media environment, the folks behind Politico seem to have figured out a business model that works. Print, it seems, isn't dead yet.
In Washington, Politico is now an established and respected competitor in news and comment about its subject. Lots of media entries in the Internet age have started strong and faded when they were unable to convert online audiences into cash flow or to find a buyer who could. Politico seems to be different, and it may have one of the vaunted new models for journalism so desperately being sought these days.
John Harris and Jim VandeHei had a concept for a site to cover the 2008 election cycle that would take advantage of the urgency of the Internet and their belief that they could make themselves a key destination for the campaign and beyond.
Frederick J. Ryan, Jr., the CEO of Politico, startled me in a brief corridor chat by calling it “this newspaper,” which for people in Washington it is. Politico appears in print on a daily basis when Congress is in session, otherwise weekly, and is distributed free to its intended local readers. Last Tuesday, the paper was 28 pages, with ads from Chevron, Boeing, Novartis, and Kaiser Permanente, among others. Living in New York, I am a Politico reader only on the Web, so the importance of its print product was a surprise. But I knew the star bylines and was familiar with the energy and tone of their pieces. Mike Allen’s dawn e-mail, Playbook, a summary of news stories and gossip appearing in morning media, quickly has become a popular notice board for the politically minded chattering classes and is currently sponsored by Starbucks, which pays what I’m told is real money.
So there it is: a newspaper with advertising directly addressed to its target audience in the nation’s capital, and a Web site with reach and (as is the Internet’s strength) an infinite potential for visibility. What adds to Politico’s breadth and financial depth is its ownership by Albritton Communications, which includes WJLA, the ABC affiliate, and the 24-hour News Channel 8. Politico shares expansive premises in Arlington, Virginia, with the television outlets, and therefore has full technical capacity for its reporters to appear anytime, any place. Unlike most startups, it is supported by a full infrastructure of corporate services, including human resources, finance, and IT. Putting it together you have a “news organization,” which is what its editor in chief and co-founder John Harris chooses to call it, focusing on the output, rather than the means of distribution.
That multiplatform capacity, all of which can attract advertising revenue and potentially share in subscription volume from, say, cable-television programming, is what distinguishes Politico from new sites such as The Huffington Post, which for now, at least, is relying on Web-based advertising alone or ProPublica, the investigative collective, which is backed by philanthropy.
The history of Politico (in a nutshell) is that Harris and Jim VandeHei, two leaders of the political reporting team at the Washington Post, had a concept for a site to cover the 2008 election cycle that would take advantage of the urgency of the Internet and their belief that they could make themselves a key destination for the campaign and beyond. The Albritton people were discovering at the same time that their efforts to close a deal for an existing Capitol Hill newspaper, The Hill, were going nowhere and decided to back Harris and VandeHei instead. As Harris explains it, the investment and infrastructure provided by Albritton was essential, as were the attractions of starting from scratch rather than accommodating the traditions and competing demands for attention they would have faced at the Post. So they jumped.
Harris says that Politico lost $3 to $4 million in its first year, $2 million in its second year, and, he says, is on track to break even or turn a small profit this year. Print advertising constitutes about 60 percent of the revenue, with the rest from the Web and smaller streams of income (it costs $200 to get the newspaper delivered, for example). I’m guessing that Politico’s results and potential are significantly affected by being embedded in the greater Albritton enterprises. The real test of its viability is its contribution to the company’s overall volume and overhead. By all accounts, Albritton is more than satisfied with Politico’s growth so far.
In the Washington Post the other day, Howard Kurtz said that Politico’s online readership reached 4.6 million unique visitors in October and is now about 3 million, according to Nielsen Net Ratings. By contrast, nytimes.com is almost back to its October number of more than 20 million, reflecting, of course, its vastly broader array of material.
Content seems to be both Politico’s strength and its limitation. “No one comes to us for Redskins news,” as Harris said, but if they want to know what seven White House reporters can find out, double or more than what other news organizations deploy, then Politico is the place to go. (In all, there is a staff of around 100, divided about evenly between the editorial and business sides).
The major value of Politico, aside from its focus on Washington, is harder to quantify. It is its sensibility, a recognition that all of its readers will know the basic facts in the news (what Obama announced), so Politico’s role is to provide what readers don’t know and seem to want—scoops, scooplets, and sassy commentary. Politico has “immediacy and volume,” as Harris describes, it and is “groping for depth.” The whiz-bang of Politico makes it fun for junkies, the sophistication of its reporters and editors give it credibility, and their continued objective, indispensable to success, is the belief among readers and advertisers that what they are getting is so important that they are willing to pay for it.
Everyone in the news universe is looking for the ways to do pretty much the same thing: make themselves invaluable to a projected audience. Politico seems closer to getting it right than a lot of others in the hunt.
Peter Osnos is a senior fellow for media at The Century Foundation. Osnos is the founder and editor at large of PublicAffairs Books. He is vice chairman of the Columbia Journalism Review, a former publisher at Random House, and was a correspondent and editor at the Washington Post.