CrunchWars

On: September 9, 2011
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About Andrian Georgiev
Bulgarian. Worked 4 years as a business technology reporter at Capital Weekly /capital.bg/. Graduated from Sofia University in Public Relations in 2010. Interested in product development for the web. Favourites: Mad Men, Breaking Bad, Boardwalk Empire and The Sopranos.

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Robert Scoble:

Several years ago Arrington and I were headed to some conference and I asked him about how he sees himself. Did he consider himself a blogger or a journalist, I asked. His answer stuck with me all this time: “I’m an entertainer.”

In short, Michael Arrington, the founder of TechCrunch, the popular blog on startups, announced that he will start a venture fund, named CrunchFund (poor choice of name), while also staying in TechCrunch.

AOL, TechCrunch’s owner, backs the spin-off by declaring that it will invest $20 mln. in it. The blogosphere is not OK with Arrington’s new job as some people say it will compromise his work at TechCrunch.

Later it gets messier. AOL says Arrington will leave TechCrunch, while he publicly refuses to. Things heat up and Arrington gives an ultimatum to AOL :

– Restore editorial independence or allow the previous shareholders of TechCrunch to buy it back.

Then rumours start circulating that AOL has fired Arrington. It is expected to happen in the coming days.

The TechCrunch dispute is representative of the rotten processes in its owner AOL.

Engadget, also part of AOL, saw a devastating brain drain this year. In March Joshua Topolsky, editor-in-chief, and Nilay Patel, managing editor, left Engadget a month after another editor Paul Miller did the same.

The latter specifically blamed the “AOL’s way” – a long-term emphasis on page views rather than quality of content – for his departure.

For now AOL’s strategy doesn’t work. The following is the price of AOL’s shares in recent years:

Sameet Sinha from research firm B.Riley:

This whole TechCrunch issue has definitely brought down my level of respect for Tim Armstrong [AOL’s CEO]. II think it’s been evident since at least the last quarter that business processes aren’t in place at AOL. With this poorly managed process, I think he’s shown that people processes aren’t in place at the company, either.

Currently AOL’s biggest revenue stream is CPM advertising. The latter term describes a marketplace where the advertiser pays for each 1000 ad views that his/her ad gets.

So in order to profit, publishers like AOL create thousands of webpages and fill them with whatever seems like content. For example just look at the home page of Huffington Post, also owned by AOL.

Most articles there are written by thousands of low-paid contributors. On the other hand TechCrunch and Engadget still have great content.

As perfectly summarized by TechCrunch’s own Paul Carr just months ago:

The blunt truth is, online advertising is a numbers game. And, even on niche sites, the number of salable page impressions required to even break even is huge. There are just too many pages of content being produced for advertising to remain a viable long-term business model. The New York Times can’t make money online, the Guardian can’t, Slate can’t and Salon barely can.

So there needs to be more rapid business model innovation which may come through new digital narratives.

Here’s designer Pedro Monteiro’s take:

Our main goal is to learn the best way to tell a story and stop using techniques that worked only for one platform (be it text and pictures in print, video on TV or audio on radio). With digital distribution we can mix all these techniques in a way that enables our storytelling.

The project that comes closest to the approach I’m advocating is the Atavist, a publishing house for long long-form articles (described as 6,000-30,000 words). The Atavist offers the possibility of enriching a narrative with supplementary text, pictures and videos.

Let’s take one of the Atavist’s articles, “Lifted,” as an example: the tale of one of history’s most elaborate heists and the race to unravel its mysteries. The storytelling experience begins with a video of the robbers in action, filmed by surveillance cameras on site. The video helps to set the mood of the story. Swiping the page, the user can start reading the article. Important relevant details – such as a Google map with the locations mentioned in the article – appear when users touch a word in the text related to the information.
The story is written in chapters (episodes), and between these chapters at strategic points, users are presented with pictures related to the previous chapter. In “Lifted,” the storytelling is enhanced with videos, related texts and pictures. Users can also opt to hear the author narrate the story.

Another interesting development are the curation tools that help journalists construct a story through multimedia.

On the business side there is even more to be done. For example The Deck ad network maybe on to something.

Right now it partners with only 56 niche websites – DaringFireball, 37signals, A List Apart etc. They are visited mainly by design professionals and technology experts.

The publishers work exclusively with The Deck, so there are not any Google advertisements or other third-parties. Only a single Deck ad is shown on a each webpage inside the network.

Advertisers buy a monthly circulation of their ad across “three percent of all the pages viewed for that month across all fifty-six sites and services.” This model is called “cost per influence.”

More and more it seems like there will be no single business model for web publishers, but plenty of revenue streams. So stop relying so much on CPM and start digging.

Notes:

1. For more on the ethical aspects of the TechCrunch debacle see Bavan Rajan’s post.

2. For more on apps as tools for storytelling see Steve Rosenbaum’s article.

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