Poynter Online is running an interesting interview with Rafat Ali, who built and eventually sold paidContent to Guardian Media Group in 2008.
Ali says he’s bullish on the news business because of the obvious need for scale, and the fact that only a couple of star properties ever achieve the kind of scale necessary to fund a successful media enterprise.
For any vertical, B2B or consumer, we have learned [that] for most of the sites, whether it is in tech or any other sector, that beyond a certain point they don’t scale. But the Web is still all about scale. Ad models are based on scale. Audience models are based on scale, despite what everybody else says.
…speak to Henry [Blodget, the founder of Business Insider]. He will be the first to tell you — he will shout out loud — that scale matters. For him it’s all about page views, and whether you agree with him or not, that’s what he is all about, transparently. This is the reason he has not focused on just one vertical. He’s launching 10 verticals and within those verticals, his techniques are well-known by now. That’s not to say that what he’s doing is wrong, that’s just the reality of the business.
Mediabistro is also in a similar situation where its owner is trying to figure out, “OK we’ve done this in one vertical, but that’s only a mid-level success — or at least scale — how do we go from there?” So [Mediabistro owner] Alan Meckler will be the first one to tell you they’re buying stuff, moving into other fields as well. Most will not work. Not because of the company, but just because that’s the nature of the business we’re in.
Of course, what’s missing from the news business today is scarcity. Without scarcity there’s no way to apply premium pricing, or any pricing at all in many cases, and there’s no way to achieve scale. News is a commodity and only the most driven, most intelligent and luckiest operators stand a chance.