One Acquisition, Seven Trends: What the Past Year Changed in Global Journalism

It starts with an acquisition that happened yesterday

Yesterday brought a slightly surprising piece of deal news: one media company bought another.

Remember the white-bearded man who interviewed Steve Jobs again and again in his later years, Walter Mossberg? Known in China as "Dr. Mo," he was a veteran reporter at The Wall Street Journal, where he founded the popular website AllThingsD. The D conference he hosted for 11 years was arguably the tech world's most important annual event; Jobs and Bill Gates each sat on its stage for interviews several times.

Early last year, Mossberg left with his AllThingsD team and started a new site, Re/code, an online outlet covering the business of the tech industry. After he left, The Wall Street Journal had to shut AllThingsD down and launch a new section, WSJ.D.

In the 16 months since its founding, Re/code has done well: it now reaches 1.5 million readers a month. According to a survey of the media industry published this month by the Pew research center, Re/code ranks 33rd by traffic among news outlets born on the internet.

Then, yesterday, Re/code announced that it is joining the new-media group Vox Media. Mossberg himself will join Vox Media too, writing product reviews for its tech site The Verge, the very beat that made his name at The Wall Street Journal.

It all came very suddenly. Re/code was only a little over a year old, and it was doing well. The other notable thing about the deal is the buyer: Vox Media is itself an unusual brand in the media world.

What Kind of Company Is Vox Media, the One That Poached Dr. Mo?

Vox Media was founded in 2003 and was built mainly on a sports commentary site called SB Nation (Sports Blog Nation).

At first it drew little notice outside sports media. That changed in 2008, when former AOL executive Jim Bankoff joined and stepped up its investment in technology. Re/code is the fourth media outlet Vox Media has acquired.

All its sites run on Chorus, a content management system Vox Media built itself. Its rival TechCrunch called it "the next-generation publishing platform; by comparison, most media seem to be using something from decades ago."

In the early days, Vox Media owned only SB Nation, a network of 309 sports blogs of every kind.

Once Chorus was built, Engadget editor-in-chief Joshua Topolsky brought his core editorial team to Vox Media and founded The Verge, an online outlet rooted in technology that also covers science, culture, art and entertainment. This was, in effect, Vox Media's first step into public view. Buying Re/code is meant to add business coverage of tech to The Verge. Bankoff's research found that the two sites share only 4% of their users, so after the deal they should complement each other.

Vox Media now runs these seven sites:

• Sports: SB Nation, founded in 2005, made up of more than 300 sites run by a pool of part-time writers.
• Technology: The Verge, founded at Vox Media in 2011 by Joshua Topolsky, former editor-in-chief of Engadget.
• Gaming: Polygon, founded at Vox Media in 2012 by Chris Grant, former editor-in-chief of Joystiq.
• Real estate: Curbed, founded in 2004 by Lockhart Steele, former editorial director of Gawker Media, and acquired by Vox Media in 2013.
• Food: Eater, founded in 2005 by Lockhart Steele on the Curbed model, and acquired by Vox Media in 2013.
• Fashion: Racked, founded in 2007, also by Lockhart Steele, and acquired by Vox Media in 2013.
• News: Vox.com, founded at Vox Media in 2013 by Washington Post columnist Ezra Klein, focused on explaining the basics behind the news.

With seven vertical sites across different fields, Vox Media was the fastest-growing web brand of 2014. Over six years it raised US$110 million in total, and by the end of last year its valuation had reached US$380 million. Most of its sites are now profitable.

It Is Hard for a Tech-Only Outlet to Survive on Its Own

When the internet was young, everyone on it was a tech enthusiast, and tech news was much of what people read. Not any more. As more and more ordinary readers came online, only three of the 50 news sites with the most traffic in 2014 covered technology alone: CNet, Engadget and TechCrunch.

According to Pew's report, 7 of the 15 most-visited news outlets born on the internet have been acquired, and the trend so far is for old media to buy new media. AOL (America Online), for example, bought three internet-era outlets one after another: The Huffington Post, Engadget and TechCrunch.

TechCrunch, which focuses on startups and investment, was once required reading in Silicon Valley. Yet when AOL announced its purchase in 2010, the reported price was only US$25-40 million.

GigaOM, which covered the business of the IT market, was the latest example before Re/code. It had won a following among people working in cloud computing and big data; even the CIA's chief technology officer spoke at one of its events. But with thin advertising revenue and heavy spending outside its media business, GigaOM abruptly declared bankruptcy this year.

A Third of Top News Sites Were Born on the Internet

Mossberg's site losing its independence to Vox Media may look like bad news. But it shows how well Vox Media is doing. It used to be traditional media that bought successful new media; today the most active buyer is Vox Media, a young company devoted to media content.

When a journalist leaves a traditional paper like The Wall Street Journal and ends up bought by a new-media company, the trend looks irreversible.

Of the 50 most-visited news sites, 15 have no roots in traditional media and have delivered their content in digital form from the start.

Among them, the hugely popular The Huffington Post and Buzzfeed draw far more page views than the sites of most long-established newspapers and broadcasters. The Huffington Post already gets close to twice the traffic of The New York Times.

The Root of the Upheaval: The Whole World Reads News on Phones

Digitization changed many parts of the industry, above all once the screen people read on most shifted from one not much smaller than a newspaper to a phone. Every outlet is feeling its way.

More people now read the news on their phones than on computers. According to Pew, in 2014, 39 of the 50 news sites with the most traffic got more visits from mobile than from desktop.

Mobile reading dominates even at traditional newspapers going digital. Of the 25 most-visited newspaper sites, 5 already get more visits from their mobile sites and apps than from computers. As many as 5% of readers now read newspapers' online editions only on their phones.

In the desktop era, traditional media could still win more of readers' attention with better long-form reporting. Readers of The New York Times, for example, spent an average of 5.9 minutes per visit on a computer.

But the 4- or 5-inch phone screen has erased the advantage established outlets held over newcomers in holding attention. New York Times readers spend only 2 minutes on average reading on their phones, about the same as at sites born in the internet era. And this is not just The New York Times's problem: on phones, almost every news site with meaningful traffic sees roughly the same reading time.

Small screens and on-the-go reading mean that long-form reporting no longer buys a clear lead in reading time on phones the way it does on a big computer screen. This has changed how content is packaged at the most basic level: The New York Times now has a dedicated team that rewrites headlines for its mobile app, NYT Now.

Paid News Has Largely Failed

NYT Now was The New York Times's great hope for innovation on mobile. Besides a better reading experience, it offered a cheaper subscription. Yet last week NYT Now announced that all its content would be free. The paywall model, led by The New York Times and tried since 2011, is showing signs of failure.

In 2011, The New York Times began charging for online content: readers had to pay after more than 20 articles a month. Traditional media sites, especially newspapers, followed one after another. But although paywalls brought in some revenue, they drove readers away. The New York Times's traffic was overtaken first by The Huffington Post, then by Buzzfeed.

Nor did charging readers make up for the paper's falling print advertising. In its latest quarterly report, The New York Times posted a loss of US$14.3 million.

And The New York Times has done better than anyone. The flagship of the news business, it has a tech team of more than a hundred people and a brand more than 160 years old; its less famous imitators have fared worse. Today only 9 of the 50 most-visited news sites still try to make readers pay. The Atlantic has stopped charging. And after Jeff Bezos bought The Washington Post, the paper launched a new tablet app that is free for six months on the Kindle Fire.

In 2014, The New York Times started trying cheaper paid mobile apps: NYT Now for headline news and Opinion for its columns. Opinion has since been shut down, and NYT Now has dropped its fee and plans to carry display ads.

News Sites Won Mobile Readers, but the Platforms Got the Ad Money

The mobile ad market has grown nineteenfold from 2010 to 2014, reaching US$19 billion.

Yet for all that potential, news outlets have not captured most of the revenue. Five tech companies alone, Facebook, Google, Twitter, Pandora and Apple, take 64% of mobile ad revenue.

Where the money goes, power follows. At the end of March this year, Facebook announced deals with leading outlets such as The New York Times and Buzzfeed to host their stories directly on Facebook. Users can read the news without visiting the outlets' own sites, and the pages load faster.

These are the first partners, all of them important news sources Facebook wants to win over, and Facebook is handing them all the related ad revenue. But such deals will inevitably cut the outlets' own traffic further and deepen their dependence on social networks. Whether smaller outlets, or those signing a few years from now, will still get all the revenue is anyone's guess.

The same thing is happening in China. News aggregators such as WeChat official accounts, Toutiao and Yidian Zixun have gradually taken over how content reaches readers. What readers remember is more often the name of the platform than the name of the outlet.

Under Pressure, Media Try Every Channel, Even Unlikely Ones

Curiously, traditional news organizations are keener than anyone on the Apple Watch, a device whose consumer market has not yet taken shape. Of the top 50 sites mentioned above, 15 have adapted their apps for the Apple Watch, and 10 of those are traditional media. Apps from NPR, CNN and The New York Times appear on the Apple Watch pages of Apple's website as showcases for the first wave of watch apps.

But according to QDaily's hands-on review, reading news on these first Apple Watch apps is a pretty bad experience. You probably would not want to.

That the first watch apps are rough is no surprise. This is a new kind of computing device nobody had used before. To have apps ready when the watch went on sale, developers had to finish design and development before they ever got one. Apple did invite these partners to try their apps at its offices in advance, but not everyone on a design and development team could use the watch every day, so many designs and features were bound to be guesswork.

Yet with paywalls failing and platforms gaining power, media that cannot find another way forward can only seize every platform that might bring change, even if that means building products they would not want to use themselves.

Success Takes More Than a Year or Two

Through all of this, one simple truth has held: building a successful media brand takes time. It takes time to earn recognition, time for people to remember the name, and time to build a good team and let it gel.

Everything on the internet is supposed to move fast, but it is not easy for a new outlet to build real traffic. In fact, apart from Mic.com, founded in 2011, and Vox.com, founded in 2013, every one of these sites was founded before 2010.

Along the way there have been failures like GigaOM, which ran out of money, and sales like those of Re/code and TechCrunch. After AOL bought TechCrunch and Engadget, both lost their core teams to internal conflict. Even The Huffington Post is reported to be a candidate for an AOL spin-off.

Buzzfeed, red-hot over the past year, is already in its ninth year. Even Vox.com, the star site at Vox Media, the buyer in yesterday's deal, owes its rapid growth to technology and cross-promotion that took Vox Media 12 years to build.

Cover image: Hellorf