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AOL & Time Warner Redux?
By Jonathan Salem Baskin

What Will The Daily Beast And Newsweek Do Differently?

The Daily Beast and Newsweek have merged to form "something new" yet I can’t help but think I’ve heard this story before: brash, New Economy business that consistently delivers ROI and other intangibly wonderful metrics combines with dinosaur Old Economy business that is mired in making money the old fashioned way (i.e. by making it). You'd think reporters and analysts would be smarter this time around and question it, only they're not. I worry this merger is AOL & Time Warner all over again.

It’s a giant doh that nobody wants to acknowledge.

The Daily Beast gives content away for free -- "content" being the noun that genericizes the articles, videos, and other creative programming that used to be worth something (it's a synonym for "stuff") -- to attract online visitor eyeballs for which it can charge corporations for the privilege of putting advertising before (views, clicks, purchases). It can do that because it gets a lot of its stuff for free in the first place; it's in the business of "curated news aggregation," which is a polite way of saying it scrapes other sites' content (i.e. somebody else's stuff) and republishes or links to it. It also hosts more and more exclusive essayists, thereby proving it can expertly give away their content for free, too. The Daily Beast primarily makes money the New Economy way: venture funding with no requirement that it actually earn anything.

It's a creation of the Blogger Age’s openness, much in the same that AOL was a portal to the Age of the Internet. I know there are lots of differences, but work with me on this.

Newsweek could be seen as the exact opposite of the Daily Beast: its staff researches and writes what it produces, and it generates revenue by the outdated method of charging for it. The problem is that nobody wants to wait around for a week to read stories that are too long anyway, however thoughtful, and printing its articles on paper is oh so Gutenberg. Since it's not in the content business but the journalism business a nearly perfect storm of challenges has reduced this institution's worth to $1. Time Warner was in far better shape when AOL bought it (AOL used its highly-inflated stock to fund much of the deal), but it was worried about being devalued in the future. The Internet seemed like it was rewriting all the rules for its creative programming and it wanted to jump on the bandwagon.

Only the Internet didn't rewrite the rules, it simply reduced their value to zero and then offered up an ever-changing, valueless set of platitudes in their place.

Newsweek and the Daily Beast live in the future that Time Warner feared, only it's a lot scarier than anyone ever imagined. There's no money in media anymore unless the channels/distribution platforms are closed, and those examples are far and few between. Time Warner and AOL thought there as a business in this synergy business only they were wrong; a decade later and it’s no clearer how any of these old/new marriages get any closer to figuring out how to bridge the gap between 1) giving content away for free and enjoying high readership, and 2) charging for it and losing everyone. News Corp. couldn't figure it out with MySpace.

Instead, we get the same breezy, conventional wisdom arguments that history has already taught us are utterly invalid. Once the obvious and reliable "paths to monetization" became clear, the newly-merged company will start throwing off the millions. I found it interesting that one of the lead stories on the Daily Beast last week was a wet kiss article on Twitter that recycled the nonsense blather about new thinking and breaking all the rules that we've heard too many times before.

Being new is getting really, really old.

That's not to say that there aren't answers to be found. I happen to believe that credible and meaningful information -- not content, per se -- doesn't emerge from the Crowd, shouldn't necessarily have to be expressed in 140 characters or less, and has inherent value. If the Beastly News, or whatever the new entity will be called, can apply this idea to the distribution and community exigencies of technology, I think there's hope. Imagine crafting a different approach to how stories are researched, shared, vetted, produced and then updated...journalism as process, not output, and the new entity providing a routine of participation for its readers. Imagine if it figured out how to be in the truth business, not just opinions, and delivered the authority that even the freshest UCG couldn’t touch? I bet people would pay for that.

It would be a helluva lot more reliable and interesting instead of relying on the magic of conventional wisdom to do the heavy lifting. If not, look to see this marriage dissolve in a few years, just like AOL and Time Warner. It's destined to happen once the magic disappears.

Added: 15th November 2010


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