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Wolff: A casualty in the race for digital traffic

Michael Wolff
USA TODAY
Nick Denton, founder of Gawker Media, at the Interactive Advertising Bureau MIXX 2010 conference and expo during Advertising Week in New York in 2010.

Nick Denton, the often brutally self-aware founder and CEO of Gawker Media, one of the highest-flying native digital media companies of the last decade, wrote a memo to his staff last week acknowledging that Gawker had faltered in an environment more and more dominated by BuzzFeed-type traffic methods.

While Denton also used his memo to try to rally his staff, there was a clear sense of his own weariness. Indeed, he blamed his fuller personal life, and time away from the office, for Gawker's present problems. And, in an unusual management solution, he appointed a committee as a more dependable decision-making overseer for the business than he himself.

But, evident in the memo, it was not just that he had changed — the inveterate nightlifer is now married and even hopes for children — but that the business had changed. And, indeed, at somewhat cross purposes to his desire to better compete with BuzzFeed (or admitting that this is impossible), Denton urged his company back to its blogging roots.

In this, Gawker becomes one of the constants of digital media: Whatever your success has been, you will always be superseded by a next-generation form of the business. Gawker, with its digital-generation rancor, superseded, much to many people's horror, Slate, Harvard on the Internet, as the state of the digital media art (i.e., digital media has about a five-year life expectancy, give or take).

Gawker, however scabrous, actually succeeded in quite traditional media terms. It developed highly branded niche sites with a sales organization able to sell the value of being part of these brands rather than just the value of the numbers of people who visited them. But during the Gawker age, audience thresholds grew from a daunting 10 million monthly visitors as the acknowledged minimum for a high-profile site and big-budget advertising accounts, to a fantastic 50 million visitors as the price of entry, to even an absurd 100 million.

Now, in the BuzzFeed era (BuzzFeed claims 150 million monthly visitors), a media company is really a technology company, with its highest resources devoted to automating and increasing the efficiency of audience aggregation. Oddly, such automation turns out to require hundreds of people to perform. While Gawker is owned entirely by Denton and has been self-financing for most of its history, BuzzFeed has needed vast investment. While Denton has rebuffed all offers to buy his profitable business, the unprofitable BuzzFeed searches the market for a greater fool. Ben Smith, its top editor, told me recently he didn't expect BuzzFeed to be around in three years, not under its present owners nor in its present form.

Gawker, or the Gawker identity, Denton seemed to acknowledge in his memo, is a casualty in the race for traffic: Gawker succeeded because it was a carefully molded product (a small band of young people overseen by Denton — with Denton constantly hiring and firing his editors). But then it morphed into a business with a much larger number of ever-younger people having to produce more and more, and working with less and less editorial vision or leadership. Gawker began to focus on an open area of parallel writing (i.e. free writing) designed to enhance its traffic base — but, too, with the natural effect of diluting quality and confusing purpose.

Curiously, or ludicrously, The New Republic, the 100-year-old Washington magazine, with a circulation of under 50,000, announced last week that it wanted to transform itself into a digital media business.

This desire seems to have been born out of a sense that all media is now digital, or must be, that, in the conventional wisdom "digital is the future." Print is the trash heap, and digital is a wide open world of possibilities and opportunities.

But, in fact, the Denton memo can be read as an admission or painful understanding of digital media's rather straitjacket form. Vast audiences produce limited revenues, meaning content can't cost very much. It's what, in the traditional world, was called junk publishing. (Of course, in the digital world, one's money-losing high-traffic business might still be bought for big money — although that has not happened in quite some time.)

Chris Hughes, the owner of The New Republic, made vast sums as a member of the founding Facebook team — as Mark Zuckerberg's fortuitous roommate, as Hughes is no doubt tired of hearing and a description he would like to overcome. He went out of his way to say The New Republiccould no longer be a charity case. In this regard, and hardly choosing from the top of the class, he hired Guy Vidra, a former news executive at Yahoo, another company that has been thoroughly outpaced in the medium, and Gabriel Snyder, a former Gawker editor (fired, like so many) turned into for-hire digital bureaucrat.

Since 10 million monthly visitors barely signifies in digital media terms, it is hardly far-fetched to estimate that to maintain The New Republic's current level of outsize influence, it will have to transform its 50,000 print readers into 50 million monthly digital visitors. In ballpark terms, the revenue potential for 50 million monthly visitors is $25 million to $50 million a year, at a cost that usually exceeds what you will make on such traffic. (it's a kind of fool's arbitrage.) This is not, of course, an editorial proposition, but the result of better systems management — a hard game, because there are always newer and better systems and systems managers.

And, in fact, that is just the digital publishing business now. Undoubtedly it will morph into something even farther from publishing as we know it. Denton took advantage of a moment when he could use new technology to bootstrap himself into creating an original and influential new publishing form. But today's "vertically integrated digital media company," in Vidra's self-hoisting words, is another duck all together.

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