Tuesday, 20 April 2010 01:50

Are Blogs Truly Competitive With the Mainstream Media in Terms of Quality of Content?

A very interesting article was published in Crain's New York this morning, both in print and online, titled Prophet of doom. The article was about blogs, and the potential for them to raise capital and compete with the mainstream media. There's also a picture of a devilishly handsome, charismatic, and outright cute blogger there as well :mrgreen:

Here are a few excerpts, combined with my usual commentary...

  •  Mr. Middleton's Boom Bust Blog forecast with stunning accuracy the demise of such real estate bubble blowups as Bear Stearns and mall operator General Growth Properties... Now he's embarking on his next project: Turning his blogging hobby into a full-fledged investment research business, a firm where he says investors will get “realistic” insights as opposed to Wall Street puffery. Mr. Middleton plans to start petitioning venture capital firms, private equity players and established media companies in the coming weeks.
    • Yes, it's official. I'm going to start building the blog out into something much bigger, more in depth, and more accessible.
  • “His work is so detailed, so accurate, it's among the best in the world,” says Eric Sprott, CEO of Sprott Asset Management, a Toronto firm that manages about $5 billion and subscribes to Mr. Middleton's research. Well, thank you Mr. Sprott! I owe you a good bottle of wine for that one! For those that don't follow Eric Sprott's commentary (or his investment record), this accomplished man tells it like it is. He was just on CNBC and rang the closing bell last week.

     

  • Finding investors won't be easy, though. A few bloggers have landed backers recently, including Footnoted.org, acquired by investment research firm Morningstar, and Gothamist.com, by Cablevision. But most media concerns and venture capitalists have steered clear. Many blogs' revenues are scant, with few opportunities to grow and churn out the $10 million to $15 million in revenues that venture capitalists want. “The climate for blogs is almost always lousy,” says Roger Ehrenberg, founder of IA Capital Partners, which has invested in BlogTalkRadio and BusinessInsider.com.

Many blogs don't generate profits or have a clear or sustainable business model. I plan to be different (then again, I suppose so does everybody else). For one, I realize the folly of attempting to run a business on advertising revenue (notice there are no ads on BoomBustBlog). I also believe (actually, I know for a fact) that people and institutions are willing to pay for real, truly in depth analytical content. This is where the mainstream media is failing. When the paradigm shift into distributed computing and the resultant frictionless media model occurred, the mainstream media fought it instead of embracing it. A typical old school reaction. As was inevitable, it was a fight that they were destined to lose. As they saw they weren't winning, the MSM pared back the resources in its press room, slimming or eliminating investigative journalism and inhouse expertise at the very time when they should have been adding to, and building up those resources. Long story short, they gutted their profit engines when they were most needed. Now, they are starving from trying to subsist off of volatile and dimishing ad revenue models, while at the same time throwing their arms up in bewilderment at their inability to charge directly for content. The reason why most of the MSM can't charge for content on the web is not because content is given away for free. It is because much of the content is not worth paying for. Instead of breaking truly original, groundbreaking stories born from vigorous investigative journalism, media entities are repackaging AP and Reuters content. Instead of thorough rigorous analysis of the issues, media entities are serving as the mouthpieces of special interest groups, simply distributing soundbites and media clips toting the party line. While the public seems to consume that fodder en masse, those with two synapses close enough to carry a spark will not pay for it. It is that very same proximal synapse crowd that you should be targeting with real meat, and it is that very same crowd that will cough up a few pennies to consume your content. And no, it is not available for free over the Web. It is too expensive to produce, and too valuable to have, to be disseminated as freely as the latest review of "Dancing with the Stars". Until the MSM get's it, they will continue to be eaten by the Web while sticking their forks into the carcass of the rotting ad model, instead of feasting off of the ability to reach more people, more inexpensively than ever before. The key is that once you do reach them, you have to have something worthwhile to offer!

 

  • Such words fail to discourage Mr. Middleton, even though his bearish blog faces other challenges as the stock market recovers. Traffic is only a quarter of its 2008 high, according to Quantcast research. Mr. Middleton blames the drop on fad-chasing investors jumping on the bullish bandwagon, and insists his remaining audience is loyal and sophisticated. Well, while no one actually wants less traffic, I now have a much higher quality of traffic. In addition, traffic means a lot less to my business model. I am not reliant on ad revenues and eyeballs, thus who comes by is much more important to me than how many people come by. Unbeknownst to many on the blog, your fellow commenters, subscribers and readers include many of the swifter members of Congress and the Senate, strategy and prop desks from the largest global banks (yes, the very same ones that I am so hard on, no one gets cut a break here - even subscribers), analysts from prominent central banks (I'm not going to mention which ones, I'll let you guess), and some very bright family office and investment managers such as Mr. Sprott and Mr. Riley quoted above. Some of the retail investors from a year or two ago confused me with James Cramer, looking for hot tips and trading advice in lieu of deep analytical research. Hey, Cramer has his place in the investing world, it is just that we don't share the same space. The positive news is that traffic is building back up, and is building with a prime audience. On the subject of traffic, I very recently realized that I was shooting myself in the foot by not having nearly as optimized a site as I could have, hence offering traffic that I should have received to other sites that would syndicate my content. It is being rectified, along with a heavy dose of cell phone and portable device friendly interfaces and complete integration with the social media favorites, Twitter, Linkedin and Facebook. Let me know how the stuff is working.

Last modified on Friday, 23 April 2010 04:25

10 comments

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  • Comment Link Reggie Middleton Wednesday, 28 July 2010 16:09 posted by Reggie Middleton

    An interesting debate I had in LinkedIn on this blog post:

    Reggie Middleton
    Are Blogs Truly Competitive With the Mainstream Media in Terms of Quality of Content? boombustblog.com


    Richard Antille • Mainstream media.... it used to be the source for information about our surroundings and further. it used to be about researching an idea and developing a report in the form of an article.

    Today it is more about the size of the headline and its wording. It is about showbiz and the latest furor in Hollywood. Besides specific media (industry centric) the mainstream media as well as TV media have lost touch with their core.

    Blogs are the result of the individual desire to be heard. Serious bloggers can be found after examining their background, their writings and affiliations. The most difficult is to find the few bloggers who are true professional and discuss what they know.

    Eventually mainstream media and blogs reputations will converge if it hasn't already done so. Based on the amount of mainstream media vehicles and articles added to TV News 'shows' compared to the amount of truly followed blogs we can almost conclude without looking at raw data that both are providing an amount of, from bad to good, identical type of information.

    Sincerely,
    2 hours ago

    * • Reply privately

    Reggie Middleton

    Reggie Middleton • To quote you: "Besides specific media (industry centric) the mainstream media as well as TV media have lost touch with their core."

    The mainstream is not industry specific, but general in nature. To get the mainstream and vertical channels back on course, we need to adopt a subscription model wherein the reader is the customer, and not the advertiser. In order for this to work, readers need to acknowledge the inferiority of the ad model and pony up some cash for the stuff they deem worthy.
    2 hours ago

    * • Delete

    Richard Antille

    RichardStop Following Follow Richard

    Richard Antille • agree on the 'pony up' but then everyone turns up to any online sources free of charge. In this age the subscription model is 'old' and useless in this Internet age. Plus I will not pay for 99% of any media because their content is not worth it. Once the public is faced with paying to access information they will reduce their access, limit their knowledge and increase a state of impunity. Also the subscription model would leave out a large portion of the population, which needs it the most.

    With the Internet connection rate per capita in industrialized countries we could almost say that paper media can disappear easily and leave place to an all virtualized media industry. Keeping 'ads' as the main source of revenue allows a news company to provide free content and alleviating disparities between household income.

    Current model is ok. But the lack of oversight on the quality and type of information relayed is less than acceptable. Maybe we need to focus on the core of the issue and not its outcome.

    As for Blogs, they are not meant to be lucrative and should remain free for all in the future.

    So if we make internet access to media information based on a subscription model we will see more people turning towards reading a blog than paying for somewhat good quality information.

    Sincerely,
    2 hours ago

    * • Reply privately

    Reggie Middleton

    Reggie Middleton • I run a blog with both thousands of pay articles and hundreds of subscription articles, so I am communicating from experience. It takes expertise and resources to create authoritative and/or quality content. Those resources are usually backed by money. Publishers will follow the money because that is what they need to publish. There are very few households that are too poor to pony up for subscription content. Look at the satellite and cable TV industries They were predated by free, ad based TV, yet they flourish with higher margins because they cater to the viewer as the end user and not the advertiser. As pay TV services expand, ad-driven media is driven to bankruptcy.

    If you offer truly quality info that is unique, it will not - actually, cannot be offered for free on the web. No one with the means has an incentive to offer my product for free and those with the incentive don't have the means.
    2 hours ago

    * • Delete

    Richard Antille

    RichardStop Following Follow Richard

    Richard Antille • Pay TV is not going to replace subscription model. It is deployed to take on dvd rental market and capitalize on sports events. It is a niche market.

    It is good that you have such a following who pays but you are in a niche market not mainstream.

    Internet is killing the TV market not Pay TV. Half the documentary, shows and movies I watch is on the Internet, free and the exact same ones you can watch on TV. No low income household will spend its hard earned money on a per article model subscription. What article do you choose to pay for? And while we pay for cable/dish, etc.... we pay for more than just the content, which is usually supported by advertisers.

    Yes household prefer to pay for cable because they have hundreds of choice. They won't pay for hundreds of subscriptions to newspaper/magazines et al. Most people watch tv to relax and tv is available to many persons under the same roof. 1 subscription for all.
    17 minutes ago

    * • Reply privately

    Reggie Middleton

    Reggie Middleton • Yes, I have a niche market, but the mainstream is nothing but a congregation of niche markets. The reason why people don't pay for stuff on the internet is because an alternative is always offered for free. You cannot give away quality content for free because it takes capital to create it. Only the top 1 to 3 entities will thrive off of ad revenue in the mainstream (ex. Google), the rest will starve. If unique content was created, you would not have the threat of free replication, or that is only the purview of commodity content.

    Internet is killing TV because TV execs took too long to recognize the models that worked on the web and adopt them. I cancelled all TV, cable and satellite 7 years ago and have been strictly web-based ever since.

    Actually, content is all you pay for. Just look at the financial condition of the pure ad supported businesses. Most are either in, just emerged from, or going into bankruptcy. That should tell you how well that midel has been working.

    The reason why they are going bust is because the ad model was able to work with high barriers to entry and high friction business models. The Web changed all of that and now that almost anybody can be a publisher and replicate commodity content in a flash, you actually need something worthwhile to make money. The more you rely on ad driven models, the more commoditized your content becomes and the more likely you will follow those other companies into bankruptcy. true, there are a few ad driven leaders, but that will simply make monopolies who will then dictate the content you consume versus the other way around.

    There really is no way around it, it takes money to create quality and ads in a friction-free environment simply doesn't offer enough money. Even if it did, the content companies will be offering the content that makes the advertisers content, not the media consumer, hence we are right back at the quality issues again.

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  • Comment Link Reggie Middleton Friday, 23 April 2010 01:51 posted by Reggie Middleton

    I would say that to call this a recovery would be misleading. The economic indicators are pointing higher, but they also pointed higher before the economy collapsed due to asset depreciation brought on by the evaporation equity and liquidity. The problems that caused the collapse are still there, save the government liquidity backstop for the banks. As a matter of fact, most of the problems are exacerbated, ex. risk concentration in the banks, opacity in reporting (MTM), underwater RE and CRE, debt rollover schedules, and municipal and sovereign debt problems.

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  • Comment Link shaunsnoll Thursday, 22 April 2010 19:16 posted by shaunsnoll

    Many companies putting up impressive quarters but the majority that I have been listening too have some serious weakness underneath strong headline numbers. If you adjust out acquisitions and currency benefit, UTX actually had -4% organic revenue growth (vs. guidance of -2% to -3%), which doesn’t indicate the same macro environment their +19% EPS headline growth number indicates. Further troubling was the fact that the vast majority of growth per division came from China. Otis, their elevator company, had US orders -30% and EU orders flat (EU has a big retrofit surge going on for elevators right now so flat EU orders is actually pretty weak) but this was only offset by +50% orders in China. Same for Carrier, China revenue was +50% while US and EU was down in the teens.
    Same dynamics for the GE call. GE’s core industrial business, one of the best and most up to date macro indicators available, when adjusted for acquisitions and FX was roughly -5%. If it hadn’t been for their ability to “manage” losses in GE capital that quarter would have been a mess. Even PEP had -6% volume for Pepsi beverages and their fastest growing division, Latin American foods, only grew volumes +1%. EU snack and beverage volumes were -4% and PEP indicated that convenience stores are still seeing declines in spending despite them guiding for mid teens EPS growth. Outside of tech, there are so many companies with internal/subtle signs of weakness it gives me serious concerns about the breadth and sustainability of any recovery occurring. Similar to the macro numbers, on the surface things look solid, but once you dig a little deeper it quickly becomes apparent that there is weakness and discouraging signs everywhere. This is especially concerning given that right now companies are lapping the easiest comparisons they will have all year since the economy was in free fall this time 2009.

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  • Comment Link Reggie Middleton Thursday, 22 April 2010 07:06 posted by Reggie Middleton

    I am not that concerned with actual traffic since I don't advertise. Who is much more important to me than, how many.

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  • Comment Link Rumi Thursday, 22 April 2010 00:48 posted by Rumi

    FWIW, one big reason your traffic died down is likely that a lot of traffic was probably driven by non-subscribers, who can just access your material through zerohedge and therefore don't need to come by this site anymore. I suspect the "number of eyeballs" on your work is probably abou the same as before, but that's just an outright guess based on the number of people I hear discussing it (which hasn't changed too much over the last couple of years)

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  • Comment Link Reggie Middleton Wednesday, 21 April 2010 14:43 posted by Reggie Middleton

    Thanks, all.

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  • Comment Link macfly Wednesday, 21 April 2010 13:38 posted by macfly

    Good for you - keep up the great work!

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  • Comment Link overthetop Tuesday, 20 April 2010 09:34 posted by overthetop

    congratulations on the positive writeup.

    Just wantet to say I agree 100% with your analysis of the media industry. Is it any surprise that last year the WSJ was the only major paper that managed to increase its subscriptions? People will pay for content, not for crap.

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