Tech rags forced to face unpalatable facts

WHAT TO make of the recent wave of high-profile defections, replacements and general crashes over in the SF tech press? Some might suggest it's the death of print. Some suggest it's the death of online. Is it the death of big media, or the death of small media? The answer: none of the above. It's the death of the business-model-lite publisher.

Here's the skinny. Ziff Davis announced yesterday that Jason Young will be the new CEO of the publisher, replacing Robert Callahan. The move comes as Ziff struggles to move away from a print portfolio that lacks authority to an online world dominated by smaller, nimbler outlets. Callahan presided over a mass sell off of titles and divisions at the publisher, which divested itself of its enterprise titles last year. He also watched as PC Magazine redesigned, to general malaise, and saw the Editor of that title - Jim Louderback, a veteran of the company - walk off to work for online video startup Revision 3, allegedly taking a pay cut in the process.

Meanwhile, efforts to sell off the games division - including EGM magazine and 1up.com - faltered, proving that Ziff, as much as it had embraced online, was failing to make a go of one of the most popular gaming portals on the web. It managed to make early successes in online video, hiring TechTV old-hand Patrick Norton to make Digital Life TV and Cranky Geeks, both well received in the videoblogging-niche-TV-narrowcast market. But Norton announced his departure from the company earlier this week, without announcing where he was going - although he is widely thought to be heading to Revision 3 to join Louderback.

Ziff's woes have been mirrored over at Time, which has struggled to keep Business 2.0 magazine publishing. As readership drops and the ad money does too, there has been speculation that the September issue may be its last. Biz2 lost its most high profile writer, Om Malik, barely two years ago, as Malik left to start his own web content network focused on online businesses. His network, which now has a portfolio of must-read titles aimed at the readers who would otherwise be reading biz/tech magazines, is now a far more valuable read than his former outfit.

The rag suffered another setback when it lost its other star writer, Owen Thomas, to Gawker Media's Silicon Valley gossip rag, ValleyWag. Famed for his snarky style, Thomas gets a boat-load more freedom to report and speculate at his new gig, we suspect.

Those who got into online early, however, have not seen their fortunes fare better. Red Herring, the big business publisher of the last dotcom, is widely believed to be teetering on the precipice of absolute collapse. The magazine hasn't been seen on newsstands for months - a fact Thomas frequently points out on Valleywag - and the digital edition carries almost no news.

So if print is stalling, and attempts at really kicking off a successful online publishing business are stalling, what link do we draw between Time, Red Herring, and Ziff? Easy - they're all hung up on publications, not writers. On budgets, not costs. In short - they've failed to recognise that as the online market for ads is more competitive, and possibly even less lucrative, they have to scale accordingly.

The most successful outfits on the web right now are not the big publishers, whether online or offline. They're not the star writers, or the guest columnists earning big bucks - although we do hear that Dvorak has a nice line in French restaurant lunch reservations. The most successful online publications - whether old or new media, whether video or text - all have a lean, mean operation that employs the best people, gives them creative freedom to shape their publication, and frees them from the constraints of the traditional publishing environment and of what has gone before.

Valleywag, for example, is a two man operation. Thomas, from the post-count, appears to write most of the stories himself, with some help from its former Editor, Valley upstart Nick Douglas. The title has a famed 'Party correspondent' in leggy Megan McCarthy, but with an automated publishing system honed by a few ubergeeks, and no office premises or swanky receptionists to take care of, Gawker Media's ad executives are easily able to make money and cover its costs with ads. Lean operation + good sales + good content = internet money.

Revision 3, for all its big hiring, is likewise fairly fiscally shrewd. Located out of the centre of town at the top of an old office block, the offices aren't fancy - they yell gritty startup, at almost exactly the same frequency as founder Kevin Rose's post-hangover stubble. By combining low-cost content with actual, real ad sales, Revision 3 has set its stall out for growth. While much of Ziff's online content is good - such as DL.TV, which could easily be a Revision 3 show in styling and production value - the chances are it can never make money, given the astronomical rent Ziff must pay on its building in the very centre of Market in SF and the infrastructure that surrounds it.

Malik works from home, as do his staff. Malik built his network with standard blogging software, templated to reflect his needs, and had it up and running in roughly one per cent of the time. Avoiding wheel re-invention is a theme that the big media players have failed to pick up on, designing bespoke CMS and CDN systems again and again, racking up infrastructure costs along the way.

This is a meme that successful rich media startups are sticking to rigidly. Leo Laporte is sole proprietor of the most popular independent audio podcasting network, TWIT.TV, an outfit which basically takes the format of his years of radio shows, distributes it online through sponsored hosting and consequently attracts a massive online audience. Despite listener numbers that would have big publishers salivating, Laporte has all his ad sales handled by a third party agency and operates out of a kooky little two-man office from his hometown in the Californian wine region. Consequently, he does rather well out of the deal, by all accounts.

I recently took a trip to the BBC, ogling at the production equipment and facilities on offer to podcasters and new media intrapreneurs at the broadcaster. What I found was that for all the pushing forward by proponents of new media, the environmental constraints had staff gagging for life at a smaller startup that wasn't built around technology and production systems designed for megabucks TV ten years ago, and where the people running the company were in touch enough to truly 'get' what it is they were doing.

So the lesson is not that old media is dead. It's not that new media is better. It's not that the content giants don't know what they're doing. It's not even that old companies suck to work for, hence the recent spate of defections. It's simply that new content startups understand the value of being lean and mean and constraint-free, whereas old media houses are too stuck in the mindset of big, fancy and infrastructure-bound.

Big media ignores the fact that if you're lean, mean and successful, than the operation can be far more lucrative than being big, flash and successful.

So where now for the incumbent media providers, not just in the SFBay area but around the entire webosphere? Right now, the defections from big to small media are mostly content types, eager to embrace creative freedom and a new medium. This is bad, but not life threatening in the absolutely immediate term. When the big advertising sales guys start to defect - recognising that they might lose the company car in the first year but prepared to earn it out nonetheless - that's when we'll really see the tide start to turn.

The choice for big media will be to shrink - to lose some pounds and get a little nimbler - or die, unable to compete on a cost basis with publishers and writers operating on far smarter economies of scale, attracting the smartest people. The challenge for old media is to recognise this, and face it - not to keep hiking ad rates, hoping that no one will notice the general disarray. µ