Trust Me, I'm Lying: Confessions of a Media Manipulator (9 page)

STRIPPED BARE, THE ECONOMICS OF ONLINE NEWS—the way blogging really works—is a shocking thing. I’ve never been desperate enough to need to work inside the system as a lowly (un-) paid blogger, but as an outsider (a press agent and a media buyer), I saw plenty. What I learned is the ways that sites such as AOL, the
Huffington Post
, and even the website of the
New York Times
make their money, and how much money they actually make.

This matters, because as businesses designed to make money, the way in which they do business is the main filter for how they do the news. Every story they produce must contort itself to fit this mold—whatever the topic or subject. I will show you this by explaining exactly how I have exploited these economics for my own personal gain. You’re free to view these lessons as opportunities or as loopholes that must be closed. I see them as both.

TRAFFIC IS MONEY

On the face of it, blogs make their money from selling advertisements. These advertisements are paid for by the impression (generally a rate per thousand impressions). A site might have several ad units on each page; the publisher’s revenue equals the cumulative CPM (cost per thousand) multiplied by the number of pageviews. Advertisement × Traffic = Revenue. An ad buyer like me buys this space by the millions—ten million impressions on this site, five million on another, fifty million through a network. A few blogs produce a portion of their revenue through selling extras—hosting conferences or affiliate deals—but, for the most part, this is the business: Traffic is money.

A portion of the advertising on blogs is sold directly by the publisher, a portion is sold by sales reps who work on commission, and the rest is sold by advertising networks that specialize in the remaining inventory. Regardless of who sells it or who buys it, what matters is that every ad impression on a site is monetized, if only for a few pennies. Each and every pageview is money in the pocket of the publisher.

Publishers and advertisers can’t differentiate between the types of impressions an ad does on a site. A perusing reader is no better than an accidental reader. An article that provides worthwhile advice is no more valuable than one instantly forgotten. So long as the page loads and the ads are seen, both sides are fulfilling their purpose. A click is a click.

Knowing this, blogs do everything they can to increase the latter variable in the equation (traffic, pageviews). It’s how you must understand them as a business. Every decision a publisher makes is ruled by one dictum:
traffic by any means.

Scoops Are Traffic

One of the biggest shocks to the online world was the launch of
TMZ
. The blog was developed by AOL in 2005, and revenues skyrocketed to nearly $20 million a year almost immediately, paving the way for its now famous television program. This was all accomplished through a handful of major scoops. Or at least, TMZ’s special definition of “scoops.”

The blog’s founder, Harvey Levin, once said in an interview that
TMZ
is “a serious news operation that has the same rigid standards that any news operation in America has.” This is the same site that once published, at 4:07
A.M.
, an exclusive scoop: a blurry, never-before-seen photo of future president John F. Kennedy on a boat filled with naked women. This EXCLUSIVE scoop was headlined “The JFK Photo That Could Have Changed History.” Only it couldn’t have altered world events for one simple reason: The man in the photo wasn’t JFK. In fact, it turned out to be a spread from a 1967 issue of
Playboy
.
¹
Oops!

Despite missteps like this,
TMZ
turned scoop-getting into a science. They broke the story of Mel Gibson’s anti-Semitic outbursts during his DUI arrest. And then got video of Michael Richards’s racist onstage meltdown, posted the bruised Rihanna police photo, and announced the news of Michael Jackson’s death.
TMZ
originated four of the biggest stories to come from the Internet and captured a substantial audience from these enormous surges of traffic.
*
They didn’t always use the most reputable or reliable means off getting their scoops, but nevertheless, today when people think celebrity news, they think of
TMZ
. (They don’t think of
Defamer
,
Gawker
’s predecessor to
TMZ
, which was shuttered because it couldn’t deliver any scoops and they don’t like Perez Hilton’s silly little drawings anymore either.)

It sent a very clear message to publishers: Exclusives build blogs. Scoops equal traffic.

The thing is, exclusive scoops are rare, and at the very least, they require some effort to obtain. So greedy blogs have perfected what is called the “pseudo-exclusive.” In a private memo to his employees, Nick Denton, founder and publisher of the Gawker Media blog empire, asked the writers to use this technique, because it allows them “to take ownership of a story even if it isn’t a strict exclusive.”
²
In other words,
pretend they have a scoop
. The strategy works well, because many readers will see the story in only one place; they have no idea that it was actually broken or originally reported elsewhere.

One of
Gawker
’s biggest scoops early on in the race—certainly a
TMZ
-level story—was a collection of Tom Cruise Scientology videos. It is a good example of a pseudo-exclusive, since the work wasn’t done by the site who eventually got all the pageviews from it. Since I witnessed the story unfold behind the scenes, I know that tapes were actually unearthed by Hollywood journalist Mark Ebner, whose blog I was advising at the time. Ebner called me, very excited with news of a potentially huge scoop and said that he’d bring over the materials. A few hours later, he gave me some DVDs in an envelope marked confidential, which I watched later that night with a friend. Our stupid reaction: “Tom Cruise being crazy; how is that new?”

Gawker
had a different reaction. See, Ebner had also shown the clips to his friends at
Gawker
, who turned around and immediately posted a story featuring the videos before Mark or anyone else had a chance to. I don’t know whether
Gawker
promised Mark they’d give him credit. All I know is that what happened was shitty: Their post went on to do 3.2 million views and bring their site a whole new audience. Mark received nothing, because
Gawker
didn’t link back to his site—which would have been the right thing to do. By doing this,
Gawker
owned a story that was not theirs. Only after did I begin to understand how blog fortunes were made: off the backs of others.

When all it takes is one story to propel a blog from the dredges of the Internet to mainstream notoriety, it shouldn’t come as a surprise that sites will do anything to get their shot, even if it means manufacturing or stealing scoops (and deceiving readers and advertisers in the process).

Established media doesn’t have this problem. They aren’t anxious for name recognition, because they already have it. Instead of bending the rules (and the truth) to get it, their main concern for their business model is to protect their reputations. This is a critical difference. Media was once about protecting a name; on the web it is about building one.

Using Names to Build a Name

Blogs are built on scoops and traffic, and this is made possible by big names. The economics of the Internet values consistent hitters, and so one of the safest bets a site can make is to lock up an all-star or A-list blogger to helm their business. Like so much of the history of blogging, this trend begins with
Gawker
…sort of.

In 2004, Jason Calacanis, the found of Weblogs, Inc., poached editor Pete Rojas away from
Gizmodo
, at the time the dominant gadget blog owned by
Gawker
. He gave Rojas a small equity stake in his company, and together they founded
Engadget
, which quickly surpassed
Gizmodo
as the reigning champion of scoops and big stories. After founding
Engadget
, Rojas created another site for Calacanis, this time a video game blog called
Joystiq
, which became another enormously popular site.

Next, there is Andrew Sullivan, who makes Rojas look like a minor league player. Sullivan’s name and blog,
The Dish
, is one of the most sought-after to build a site around. His now decade-old site was first leased by
Time
magazine’s website and spent several years under their domain. He was then stolen away from
Time.com
by
TheAtlantic.com
to bring digital life to the faltering print publication. Sullivan delivered; his Daily Dish would eventually draw more than one million visitors a month to
The Atlantic
. Like any franchise athlete, they were able to build a team around him, using his name to attract writers and influential readers. In 2011, Sullivan left for
The Daily Beast
, in order to start the cycle all over again—but the bump in traffic and prestige stayed at
The Atlantic
.
The Daily Beast
, fresh from its merger with
Newsweek
, was equally desperate for traffic and name recognition and was willing to pay serious money for a shot of Sullivan’s brand-building power.

Bringing in big (online) names is now a go-to move for sites trying to build traffic. The
New York Times
brought the
Freakonomics
blog under their umbrella in 2007, and later did the same with Nate Silver’s
FiveThirtyEight.com
. B5Media launched
Crushable.com
and
TheGloss.com
under the charge of notorious
Gawker
founding editor Elizabeth Spiers. The
Huffington Post
built most of its original cache by having celebrities blog on the site, a rarer feat then than it is now. The list goes on and on.

All these bloggers, from Sullivan to Rojas to Spiers, got their high-paying gigs (and often a percentage of a site’s revenue) because they built big names for themselves. Their strategy is the same as their publisher’s: Build a brand by courting controversy, breaking big scoops, driving comments, and publishing
constantly
. And their big deals with sites like the
New York Times
or
The Daily Beast
make these questionable tactics all the more necessary. The big names have to stay big to stay on top.

THE BLOG CON: NAMES, SCOOPS, AND TRAFFIC CREATE AN EXIT

I’ve written about how sites engage in an endless chase for revenue through pageviews, and that
is
what they do. However, blogs are not intended to be profitable and independent businesses. The tools they use to build traffic and revenue are part of a larger play.

Blogs are built to be sold. Though they make substantial revenues from advertising, the real money is in selling the entire site to a larger company for a multiple of the traffic and earnings. Usually to a rich sucker.

Weblogs, Inc. was sold to AOL for $25 million. The
Huffington Post
was sold to AOL for $315 million in cash, with its owner, Arianna Huffington, deliberately eschewing the opportunity to wait and build for an IPO.
TechCrunch
was also sold to AOL for $30 million. Discovery bought the blog
TreeHugger
for $10 million.
Ars Technica
was sold to Condé Nast for more than $20 million.
Know Your Meme
was acquired by Cheezburger Media for seven figures. FOX Sports Interactive purchased the sports blog network
Yardbarker
. I worked on an acquisition like this myself when The Collective, a talent management company I advise, bought
Bloody Disgusting
, a blog about horror films, with an eye on potentially selling it to someone bigger down the line.