The Politico: Success and failure

An item today on the Politico's success as a news organization, but Ezra Klein notes its apparent failure as a business model:

The success of Politico actually seems like an incredibly discouraging sign for the media. . . . A year-and-a-half after launch, it's getting 3.5 million unique visitors per month and 25 million page views. And yet not only is it unprofitable, but 60 percent of its revenues come from advertising in the 27,000 circulation print version. In other words: Politico got the online readership it dreamed of, but it hasn't come even close to figuring out how to monetize it.

OK, to start with, the failure of online advertising to create the kind of revenue stream needed to sustain a full-scale news operation is not news. This goes back to the era of the dot-com bubble, when Salon.com got a huge investment and a lot of hype and produced nothing but red ink -- or should that be "red pixels"?

In their defense, the Politico made some bad business moves during its first year of operation, hiring more staffers than it actually needed (including Amy Doolittle, a feature writer who'd done excellent work at The Washington Times) and then laying them off. So it may be that, with further streamlining to trim costs, they may yet become profitable.

Also, it must be pointed out that the Politico is part of a larger communications company that owns TV stations, etc., and if they can get some synergy happening, the Politico might be sustainable so long as its unit losses are relatively small compared to the overall profitability of the parent firm.

Still, Ezra's basic point is solid. The collapse of print news circulation and advertising has not been matched by the development of comparable profit opportunities online, and thus the news business is hurting. (Note that Klein is, himself, employed by the American Prospect, a non-profit funded with donations from rich liberals.)

My former boss Fran Coombs has some nostalgic thoughts about "The Front Page" and old-fashioned newspaper competition. Washington, D.C., is one of the few places left in America where you still have multiple newspapers (and other news organizations) racing to capture the "scoop." The news business thrives on that kind of competition, and unless we can develop new revenue models to fund reporting, the industry must suffer.