Lessons

There are certainly lessons to be learned from Reddit. Both a news aggregation/curation site and a community site, Reddit gives users what they want by sharing editorial control with them. It’s worth noting that co-founders Steve Huffman and Alexis Ohanian allowed that idea to spread to their business model as well — (with the sponsored links Ohanian explained in the last post).

Operating with readers in mind at every step has its benefits. Passionate Redditors are more likely to post well-researched, informative comments if they believe their posts matter.

Take yesterday for example. Within the unsatisfactory cable news coverage of the massive 8.8 earthquake that hit my beloved Chile, there has been little attention to the science at play. Most people have been wondering why the destruction in Haiti was worse when its earthquake was far less powerful. Major factors at play are infrastructure and socio-economics. Chile’s history of earthquakes has given the country the strength of preparedness. Its buildings are stronger, as is its general infrastructure. The country is also more economically stable than Haiti. But there are also geological explanations. While cable TV news rarely devotes the necessary coverage to science (as revealed in this Pew Research Center report which I wrote about in 2008), one college student filled a tiny piece of the void by using his seismology research to inform his peers on Reddit.

So, it pays off to care about the users you’re serving.

For a first-person account of the terremoto muy fuerte en Chile (very strong earthquake in Chile), read my good friend Matt Suggett’s blog: http://www.matt-suggett.blogspot.com/.

Conversation with Reddit Co-Founder Alexis Ohanian

Three years ago, the magazine publishing giant Condé Nast purchased a social media startup called Reddit. Four months ago, that Big Media bastion folded three of its magazines, including Gourmet, (particularly sad for food writers/lovers like myself).

There aren’t too many people today who’d be surprised that a social media website has the potential to be more profitable than print publications. But what is it about online social media that succeeds where online publications fail? After all, the conundrum of how to monetize the web still exists.

One piece of the puzzle worth figuring out is how users participate in social media differently from how they consume news. That was my impression, anyway, after a long conversation with Reddit co-founder Alexis Ohanian.

Ohanian and his college roommate Steve Huffman first came up with their multi-million-dollar idea in 2005 after a failed attempt with an entirely unrelated idea. They initially wanted to create a mobile phone application for placing and paying for food orders. At the time, a fairly novel idea. But the folks at Y Combinator didn’t seem to think so. Luckily, YC’s Paul Graham saw potential in the duo. He sat down with them to brainstorm, and the idea for Reddit began to form.

“At the time, it was just, ‘Let’s create a front page of the web.’ That was a great catch phrase that Paul came up with,” Ohanian said.

Okay. Fastforward five years. Reddit is now a social news site with 7 million unique visitors per month. Ohanian and Huffman are now “retired” from Reddit, as their contracts with Condé Nast expired in October.

Since I’m interested in what old-school media can learn from new-school communities like Reddit, I thought I’d pick the founders’ brains a bit. Ohanian, who’s currently doing a Kiva fellowship in Yerevan, Armenia, talked with me over Skype this week about Reddit’s democratically created “front page of the web.”

(Disclosure: I went to UVA at the same time as Ohanian, but we’d never met before our chat this week.)

Me: How did you approach the business model puzzle of monetizing a website?
Alexis Ohanian: Yeah, that is a puzzle. Well, we were fortunate because we also started Reddit at a time back in 2005 before this global kind of clusterfuck [happened]…So it was a lot easier to get away with a model that was, “If we are the front page of the web — if we really can be this really important New-York-Times-of-the-Internet front page — people will pay money to advertise, because it’s prime real estate.”

…And at first we didn’t even have ads on Reddit — for about six months into Reddit. We had taken $12,000 from Y Combinator, took an additional $70,000 in angel funding, and that was it. We were just very, very, very cheap. That was a huge advantage. One of the biggest advantages for someone to start a startup out of college is that your ignorance is so useful because your standards are so low. So not only are you willing to work with no vacation days, no weekends, no 9-5 work schedule, you’re also comfortable living in an apartment that’s not much different from where you lived in college and eating things like pizza and leftover Chinese food everyday. And so we had a really, really low burn rate. In fact, the day we got acquired, our biggest expense was still rent.

So, we didn’t have anything too creative [for revenue streams]. The one we did find that made us “profitable” actually fell into our laps. Because I got an email from the head of business development at Condé Nast.

Me: What does the full business model for Reddit look like now?

Alexis: So we ramped up advertising. That is, we put advertising on the site. [laughs] That happened shortly before we got acquired…

We’ve also gotten really creative with advertising in that we’ve developed our own self-serve tool. So we have these sponsored links that show up right on the top of Reddit — like, prime, prime location. We’re talking 2% to maybe 5% click-through rate, which is really, really high…Basically anyone can go in with their credit card and $20 and say, “I’d like to buy front page placement on Reddit.” And so, they come up with a headline, a URL, and link to whatever they want — their t-shirt store, their band, whatever — and people can vote on it and comment on it just like any other link except that it’s got prime placement right on the front page. And that’s been a great new source of revenue — and a really innovative one.

Me: Do you think those sponsored links could affect the community-driven editorial nature of Reddit?
Alexis: By putting a link there at the top, it certainly does affect it. The reason we feel good about it, and the reason the community has responded so well to it, I think is in large part because you can vote and typically comment on these links.

Me: Any other streams of revenue?
Alexis: At the start of last year, Josh, Condé Nast Digital’s publisher, was like, “Alexis, this is gonna be a tough year, probably. Be prepared to come up with something new.” So, we really pushed selling merchandise. Our good friends, who are web comic artists, literally make their living off selling merch. And so I thought, you know, we’ve got a devoted enough community of readers, perhaps we can really go hardcore selling things with the alien on it…So merch actually became a big thing for us last year. It did especially well in the run-up to the holidays, of course.

Me: So, why sell Reddit? Why not maintain control over the site?
Alexis: If I had my druthers in a perfect world, I would love to still have Reddit independent and having the really significant kind of impact that I think it can have. I still really believe in the Reddit model. I would love for more people to copy our code [which is open source] and use it, because I think it works really, really well at breaking interesting, good content. On the other hand, when we sold, there were a lot of factors that went into that decision. Obviously, how we felt Reddit would be post-acquisition — what our lives would be like. It would be weird to work for someone else, and to not have total control is a scary thing. Fortunately, the three years I was at Condé Nast, we had near total autonomy. Which is great. The fact that Steve and I stayed for all 3 years was just a very good indication of how well we were treated.

So with that assuaged, there were extenuating circumstances in my own life personally that made it very desirable to be sold, to have a more stable 9-5ish life, to have vacation time, to feel like I had not squandered the last year and a half — which was already ludicrous — to think that we had gone from starting up in a little apartment…to being acquired about 16, 17, 18 months later is absurd, I know. But the timing of that worked really well for things in my life. I can’t speak for Steve, you’ll have to ask him. But personally, it was definitely the time.

Me: Why do you think a big publishing company in the business of magazines and journalism would be interested in a social media site?
Alexis: Well, so, I can’t say for sure. I can definitely tell you the reasons that we pitched to [Condé Nast]. The number one would be, Condé Nast is very well aware that the landscape has changed and that online is where people are going to gravitate toward more and more. And going back to having that prime real estate of the “Front page of the web” is a valuable place to be. To own the source of the best distribution of news from around the web.

So that combined with the fact that they are not historically a technology company, but by acquiring us, they would be getting Google-caliber programmers automatically. And with that, they could then hire more top-tier programming talent. If there’s anything I’ve learned it’s that if you’re not a programmer, especially a good one, you have no chance of evaluating programming talent. No chance.

I think one of my favorite facts about Reddit is that we do over 1 million unique visitors a month for every employee we have. We do over 7 million uniques a month, and at the moment there are five people working on Reddit right now — four who are programmers. So that ratio is really hard to beat.

Me: Do you think Condé Nast wanted to tap into Reddit’s large network?
Alexis: I think the users are attractive from an advertising standpoint, because they’re well positioned as being Wired readers 10 years younger. Our users…have a median age of 27, are fairly affluent, very well educated, predominately male. What I’ve been told is that they represent an attractive audience to market to. Little do [the advertisers] know, our users are also some of the hardest people, I think, to market to, because they are very skeptical of all advertising. And I think rightly so.

Me: What can journalism and media sites learn from Reddit?
Alexis: [Reddit shows that,] online, the journalists themselves, the people creating content, are more important than ever. So it’s not as important to be working for Newspaper X. Whereas, 50 years ago, the brand that mattered was the newspaper, 50 years from now, the brand that will matter is the actual content creator. Jane reporting from wherever. It’s her content that’s going to matter more…So that gives me hope.

Me: At the beginning, before Reddit took off, how did you get the word out and attract users?
Alexis: Stickers.

No, well, I did put a lot of stickers up around of Cambridge. We were very generous with our stickers. That was our entire advertising budget…But, you know, the biggest thing we did was a combination of being very active within the community…and responding to feedback and making that a priority. I know we’re not as good as we used to be, and part of that is, unfortunately, because customer service does not scale very well. But, unfortunately, other companies have set expectations so incredibly low for customer service, so it’s not hard to impress people…

Me: Were you ever afraid you wouldn’t attract enough users to make the site work?
Alexis: Oh yeah. everyday. It’s a very bipolar existence. Some days you think you’re kicking the world’s ass, and other days you just think you’re getting shat upon…But after a couple months of really slogging away — bugging our friends, responding to every blog that mentioned Reddit ever — we actually had enough users to make the site work…That said, the fears then became, oh, we’re doomed. We’ve got users, we’ve got traffic, but who knows what the next day holds. So that bipolar existence never stopped, really, until the morning of the acquisition. But, I think it takes a certain amount of insanity to start a startup — any startup.

Me: Now, there are several social bookmarking sites online. Why is Reddit more successful than some of the other sites out there?
Alexis: Community, one. And two, being its own site. We launched without knowing about Digg, which is our chief competitor. And that, in hindsight, was a great, great move for us because…we were building the site based on our own imagination. And I think where so many have failed because they just try to copy, [that failure comes] in part because of not innovating.

Me: Twitter, which of course has an enormous number of users, is also used for link sharing. Why should Twitter users bother using Reddit?
Alexis: I think it’s quality. No one can dispute Twitter’s popularity. What I will dispute, though, is whether or not the top trending links on twitter are really the most interesting links [of the day].

Me: So, you’re doing a Kiva fellowship right now. How are you liking Armenia?
Alexis: It’s been going really well. I’m having a lot of fun, so it’s been great. I’m half Armenian and this is my first trip to Armenia. It’s bad because I’m also half German, and I’ve been to Germany like 11 times; I’ve been a much better German than Armenian, so I’m making up for it now in the next few months.

Me: What advice do you have for other media entrepreneurs?
Alexis: Only that they should never take advice from a 26-year-old. Surprise! Sorry.

Me: Anything else you’d like to add?
Alexis: Fun fact. There might be something cool coming up that affects UVA graduates that I’m working on. So I will keep you abreast.

Anyone? Anyone?

So, I’ve been thinking a lot lately about the idea of diversifying. (Yes, I am going to keep linking to that Wu-Tang Financial sketch because I kind of love it.) I’ve heard from several media entrepreneurs recently who turn to non-traditional gigs to help subsidize their journalism. For example, Rachel Sterne, founder of the global citizen news site GroundReport, does digital media consulting to help keep her journalism venture up and running. Writer Elizabeth Spiers, the founding editor of Gawker who went on to launch Breaking Media, does media consulting, too. She has also started a ton of journalism sites, she teaches, and she’s coming out with a novel. And then there are freelance journalists. I’ve talked to freelance photographers and videographers who’ve turned to commercial work for cash money and freelance writers eying prospects in brand work, editorial strategy, SEO strategy, etc.

It seems to make sense to me. Journalism keeps getting harder to make money from. So why not turn to related, though not-quite-journalisty, ventures?

So…I’m going to ask a dumb question. What exactly do media consultants do? I know the answer probably varies from gig to gig, but I’m really curious about the specifics. Any media consultants out there? I’d love to hear from you folks about what you do on a typical day. And whether it’s fun, challenging, easy, weird, or something else entirely. Anyone out there? Anyone? Anyone? Bueller?

What the Journalism Industry can learn from sites like Metafilter

I was surprised to hear from Metafilter founder Matt Haughey that online advertising alone is a sustainable model for his site. I wasn’t surprised to learn why: Ask Metafilter allows for ultra-targeted advertising. The ads don’t just work because they’re matched to people based on subject matter. They work because the timing is just right. Non-members (the only folks who actually see ads) stumble across Ask Metafilter because they’re actively hunting down answers, advice, products, and services. If I’m looking for a new digital camera, for instance, I’m searching both for products to choose from and for information and tips and opinions from real, live humans. Ask Metafilter has both in one place.

This is interesting to me because big media companies are still freaking out about online sustainability. Not even the New York Times has been able to crack the code for a working business model online. (Thus the announcement last month that the Times will soon charge for content.) Ad revenue often falls apart online because, all of a sudden, advertisers know how many people they’re reaching. Advertisers can no longer trick themselves into believing that every reader and every viewer and every listener is paying attention to every ad. The jig is up.

But are newspapers and magazines losing the monetizing game because they suck at playing? Is it because they refuse to change their ad sales model for the Internet? Do they even have the resources to start from scratch with a new approach? Or do they need to diversify and rely on multiple sources of revenue?

This is all part of my thinking that we (journalists) can learn a lot from webby entrepreneurs who don’t think like journalists.

Conversation with Metafilter Founder Matt Haughey

At the heart of web journalism is the opportunity to engage, respond to, and learn from the community. Successful entrepreneurs have been able to figure out what online communities want and then give it to them.

Matt Haughey was one of the first people to do that. He started the community blog Metafilter in 1999. At a time when publishing models were still very top-down — “I talk, you listen” — Metafilter was a place where anyone could share ideas, comments, questions, and links. It was a forum for all topics under the sun. Metafilter eventually spawned the popular Ask Metafilter, where people can get answers from the community on questions from “Can I donate breast milk to Haiti?” to “What rates should I charge as a new freelance photographer?”

I spoke with Haughey this week about how he grew Metafilter from a side project into a profitable venture. In our conversation, he stressed three main things: build the site you want to use, listen to the community, and stay small.

Me: How many users does Metafilter have?
Matt Haughey: About 102,000. Around 15,000 active in the last week.

Me: How many new users do you get per month?
Matt: We’ve metered it — because of the $5 sign-up fee — purposely to slow it down. Maybe like 200 [new users] a month. Membership was free up until we had about 20,000 users. So it’s grown slowly ever since then.

Me: What about readership?
Matt: It’s continued to grow and grow — about 10 percent every few months, doubling every year. My Google analytics say there are about 17 or 18 million pages viewed by 7 million people around the world each month.

Me: How does readership break down, domestic versus international?
Matt: About 6.3 million out of 9.5 million are [readers] in the U.S…We have a huge European contingent…And New York is the most popular location.

Me: Do you have streams of revenue besides the signup-fee and advertising?
Matt: That’s pretty much it…The $5 signup fee isn’t subscription revenue [since it's a one-time thing]. It’s mostly just putting a huge hurdle in front of having to deal with new users. ‘Cause it’s such a pain. The last ten years have shown that any time there’s press, like the New York Times writes something about us, 300 people sign up and then wreak havoc for a while, and then go away. [Without barriers to entry] it would just be a nightmare.

So it’s really ad-based. It’s not something I ever set out to establish. I lucked into it, being in the right place at the right time.

Me: So what does your ad revenue look like?
Matt: It’s been really successful. I’m really lucky with the way Ask Metafilter works. Every question’s about a topic that’s easy to match ads to.

The other weird thing is, ads aren’t even shown to members. Members asking about what kind of digital cameras they should get want honest answers. But non-members searching for digital cameras online get [to Ask Metafilter] in that search.

Me: When you started Metafilter, did you have an idea of who the community was going to be and what it wanted?
Matt: I originally started it in ’99 when there were only like two dozen blogs. I knew everyone who had a blog and I just wanted to start my own. In the beginning, I used to go to Slashdot a lot and thought it could be a lot better — cleaner and simpler. [Metafilter] was sort of the first community blog. The first blog with comments, really. It was just straight up about any interesting thing online you could post.

Ask Metafilter is much more task-oriented. That was really launched in response to people asking for it a lot. And I thought that wouldn’t be a bad idea.

Me: How is Metafilter different from other messageboard/forum sites out there?
Matt: Metafilter benefits from being big and old and established now. There are about a million Q&A sites now, and I think Metafilter works well because the community’s big enough that there’s a wide range of experiences — but not so big as Yahoo Answers, where it’s like shouting into the abyss. It’s still personal and people want to help each other. It’s not a giant, anonymous, humongous web portal. We have a happy medium.

A friend of mine studying to be a pilot just started joining these two pilot forums and they’re God-awful. One let this guy talk on and on about politics. It’s just pure noise. Once a month, he comes back and says, “Oh my God, I never realized how much work you do behind the scenes.”

Me: Since you have barriers to entry — the sign-up fee, the one-week waiting period, etc. — does Metafilter benefit from being sort of exclusive?
Matt: Yeah, I mean, it’s not bad having some exclusivity. It’s definitely good that we won’t just get random driveby 15-year-olds like on Yahoo Answers.

Me: Is Metafilter the kind of site that grows itself? Like Facebook or Twitter, which are both self-expanding networks.
Matt: Yeah. It’s grown in fits and starts. But yeah, it grew pretty much on its own. There would be some sort of press mentioned or event, and there’d be a stairstep of growth, and then ten percent of those 300 people would stick around.

It grew naturally over first few years. I never sort of advertised the site anywhere. It just sort of grows all the time. Just sort of randomly. I’m not doing anything to goose that or anything. Because [the site] doesn’t work if it’s big. Metafilter is actually run by me and two moderaters and a programmer. It’s really done by hand. We’re constantly emailing people, contacting people personally. It’s a ton of work and would never work if tens of thousands of more people joined. I’m not interested in it going to twitter proportions at all.

Me: So many sites have developed a space for people to organize around topics that interest them. For example, Reddit, which is mainly a site for link sharing and social bookmarking, now has forums similar to Metafilter’s. Do you think people feel a natural need online to organize socially, no matter what the website?
Matt: I think people are constantly asking for more and more features. The more time someone spends on a site, the more they want it to do for them.

I have people constantly asking me to recreate Gmail, recreate Flickr, recreate Twitter, recreate Delicious. “Can’t I just post a link instead of having to make a post about it?” “Can’t I upload photos into posts?” Well Flickr already does photos so much better, so why don’t you just go there and we’ll figure out ways to bring them into our site.

I think it’s natural for the most hardcore members of any community to request those kinds of things.

Reddit grows the way it does because they’ve got a staff of like a dozen, so they can whip out new sections pretty easily.

Facebook’s coming at it from a corporate position. It’s basically like AOL in 1997 — everything is there and there’s no need to go anywhere else. I don’t know if they’re even considering what users want anymore. It’s all about how to maximize revenue and all that crap. It’s wanting to be everything to everybody possible so they won’t have to go anywhere else.

Note: According to www.reddit.com/help/faq, Reddit currently has a staff of 5. According to Reddit community manager Erik Martin (who has commented below) new sections are created by Reddit users.

Me: How do you figure out what different Metafilter communities want?
Matt: When we think of new features, about three-quarters are suggested by users. We’re deliberately really slow about big things. Small things we do all the time.

Adding an entire new section of the site — like Travel Filter, [a travel-only section]: we fretted about it for years and then didn’t do it even though we built it. We didn’t want it to take away from Metafilter. But now we’re thinking of putting it back. [Because there are so many travel threads, we wanted] location-based tools, geocoding, better findability of previous questions.

Me: When did you quit your day-job and turn to Metafilter full-time?
Matt: I quit my job in 2005. For the first six years, I was running it from 6pm-9pm [after work everyday].

Me: You’ve said your advice for entrepreneurs is to avoid venture capital. Can you explain that a bit?
Matt: I have so many friends in the technology industry who are so obsessed with getting funded. And they’re confusing that with getting paid and it being money. People see it as free money, and it’s not. A lot of people obsessed with venture capital see Metafilter as a lifestyle business, but in my mind, it’s a mature business. It works really well and yet nobody aspires to do something like this and I don’t know why. Nobody celebrates just simple businesses that work.

Don’t take any money, don’t owe anything to anyone, build [your business] how you want instead of constantly being on that treadmill of growth growth growth.

Me: What makes Metafilter a success?
Matt: I’d like to think it’s intense moderation and customer service. I try to create an interesting space for people. I’ve done my best to support what’s going on [in the community] and not get in the way. I built the site I always wanted to be apart of. And now relentlessly keep up with it. It was three or four years before I even made a dollar, and six or seven years before it was profitable.

“It’s play or get played. That simple.”

As I mentioned in my last post, now that Things Have Changed, journalists — especially freelance journalists — have to start thinking about making what they do sustainable. A lot of journalists are saying that thinking about the business side of things will destroy ethical journalism and editorial decision-making. But won’t it just make media less dependent on corporate advertising? Public radio and television have never solely relied on advertising. (What, you say? Public media has advertisers? Well, corporate sponsorship isn’t that far off, is it? Actually, feel free to challenge me on that, because I don’t know all that much about the legal distinction and I’m interested in learning more.) NPR relies on government funding, listener donations, foundation support, and corporate sponsors. A mixed funding model. That’s going to be part of the formula for media outlets and for independent journalists.

Another part — and what this blog is about — is thinking like an entrepreneur. So for this blog, I’m going to be doing what I do best as a journalist: talking to people. I’ll be interviewing entrepreneurs who have a connection to media and entrepreneurs who’ve made it online. I’ll also be interviewing freelance writers, photographers, designers, etc. who are entrepreneurs in their own right.

But for now, I’m going to go do some “research” for my next article. It’s about craft beer. Yes, my life is soooo hard.

Boo hoo, Bambi

Just had a great bitch-session with my friend Lesley Messer who works at People magazine. We’re sort of tired of the constant “how to save journalism” discussion. Journalism isn’t going away, okay. Good storytelling is good storytelling whether it’s online, in print, on TV, on the radio, in multimedia, in writing, in Flash, or all of the above at the same time. Yes, now we have to think about sustainability and business models. Yes, now we have to try and be innovative and creative. And yes, now we have to actually think about the communities we’re meant to be serving. Boo hoo, Bambi. Maybe you should have been doing that all along anyway.

Lesley’s great quote says it all: “Do good journalism. Figure out how to make it work. Done.”

Amen.

Livin’ on a Prayer: the freelance lifestyle

I’ve been a freelance journalist for about six years. Not that I haven’t been on staff at places during that time as well. I have. But freelancing has always been a major part of the equation. I’ve talked with a lot of writers who say they hate doing it. I mean, it’s unstable, it’s unstructured, and it’s unreliable. But I love it. I get to choose what I write about, when I write about it. As a reporter and semi-photographer, it’s aaaaaaalmost a dream come true.

What’s missing, of course, is sustainability. Freelance dollars have dried up along with every other kind of dollar the journalism industry once had. Freelancers don’t get benefits. And many publications don’t even reimburse for expenses anymore. Much like “Uncle Phil” and “Cousin Carlton,” we’re livin’ on a prayer.

Still, there are plenty of folks out there living the freelance lifestyle. So I thought I’d use this blog to explore that lifestyle and how/whether we can make it more sustainable, reach out to fellow freelancers and other entrepreneurial media types, and share any of my experiences I deem un-boring enough to type out.