News on the Web: Does Size Matter?
While traditional media brands dominate web news in terms of traffic, size does not matter in terms of the viability of an online news site.
That’s the finding of a new study, Size Doesn’t Matter: An Analysis of Online News and Political Sites, authored by ContentNext research director (and former Merrill Lynch all-American research team analyst) Lauren Rich Fine.
The report notes the increasing importance of blogs and niche media sites. Alternative media offerings such as HuffingtonPost, Politico and RealClearPolitics saw tremendous growth in traffic during the 2008 U.S. election campaign, as have smaller sites such as TalkingPointsMemo and Redstate.com. While the smaller independent sites do not have the dedicated ad sales teams that the larger brands can deploy, through cost management, they can attain profitability through the use of online ad networks.
The report also looks at recent M&A transactions, noting that only 7 news-related acquisitions have occurred in the past 18 months, with 14 venture investments. Of those seven deals, the largest was a traditional media deal, Cablevision’s acquisition of Newsday. On the venture investment side, two sites, Digg and the HuffingtonPost received large amounts, both 3rd round investments. The remaining investments tended to be smaller, early round investments. According to firms interviewed for the report, this segment is less attractive for investors as returns are not large enough to demand their attention, while their capital needs are small enough so that even a good return would have modest impact on a fund.
One question is whether politically oriented sites will fare now that the elections are over. Gawker points out that weekly page views have fallen sharply from 90 million around election day. Still, the current level of 40 million is nothing to sneeze at.
The report, Size Doesn’t Matter: An Analysis of Online News and Political Sites is available for purchase.
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