Flux Research: Clyde on Business

Politico: Publishing Success Includes Print, Digital & Events in a Lucrative Market

Politico Ad

Frédéric Filloux recently spoke with Bill Nichols, managing editor of Politico, about how a DC-based political publication, web/mobile/print plus events, is employing 200 people and is apparently profitable.

The blog post is well worth a read to get a take on Politico's products and attitude featuring a fast-paced, in-depth approach that isn't afraid to ask click-inducing questions like, "Is Rick Perry Dumb?," while striving for authoritative coverage. However, from what I see, most of the headlines are fairly mundane, it's the quick and in-depth part that seems key.

Filloux lays out Politico's multiple revenue streams. Note that all such activity is focused around or will intensify during national elections aka the political publication version of the Christmas season for retailers.

Politico's Revenue Streams:

Website with 4 million unique visitors in July. "The value extracted from each visitor is quite high." [So far I've identified advertising and a paid jobs board as well as an offsite link to a Politico store on Cafe Press. Note that the website also operates in relationship to mobile versions and email alerts that offer additional ad possibilities.]

"Around half of its revenue is coming from the newspaper which sells high premium ads...published five days a week, only when congress in in session, and its 34,000 (free) copies are distributed at various strategic spots in DC." However, Politico also sells subscriptions both domestically and abroad.

"'Politico Pro', an in-depth paid-for service focusing on three critical (and lobbying-intensive) issues: energy, technology and healthcare. The price is $2,500 per month."

"An event department: get-togethers for the Happy Few with big political names, moderated by staffers. The guests don’t pay, but big sponsors do...Events will be organized not only in Washington but on the campaign trail as well."

"An e-Book venture with Random House. The concept: quick accounts, 20,000 to 30,000 words (80-120 pages), of the 2012 campaign."

Filloux states that "Politico’s method of squeezing money from every slice of its market looks logical and reproducible. But its unique ecosystem makes Politico's success difficult to replicate elsewhere."

On the one hand I agree, just as I would with most financial media successes that make money by providing info that can make money.

On the other hand, developing a strong product for a lucrative market that can serve as the basis for additional products that meet targeted needs while diversifying one's revenue streams seems like a pretty solid takeaway from Politico's success.

Of Related Interest:

Monday Note
Web + Print: A Powerful Combo

Columbia Journalism Review
Jim VandeHei Talks Politico Pro

Adweek
Can Politico Win Again?

SeeClickFix Describes Revenue Streams

How SeeClickFix Works

SeeClickFix's co-founder Ben Berkowitz discusses the revenue streams for their service for citizen communication with municipalities, designed to identify and resolve local problems like potholes, in an interview with Street Fight:

"First, there are our media partners. We have 800 local news sites that are partners. The basic SeeClickFix widget is free. The partner gets the content and we get 100% of remnant advertising that appears on the widget. About 85% of our media partners have the free widget. We also sell an ad-free widget, which about 15% of our media partners buy."

"Our second revenue stream is non-remnant advertising—on both the website and the widgets."

"Our third source of revenue is the software dashboard we sell to municipalities and community associations for managing their 311-type customer-response services, like fixing potholes. We have about 60 clients. The biggest ones are Philadelphia and Washington, D.C. Medium-size cities include New Haven and Hartford in Connecticut, Richmond, Va., Raleigh, N.C., and Corona, Calif."

Dubset (Music Mixes by DJs) Has Potentially Robust Business Model

I haven't done much writing about business models at Hypebot (and I need to update my list of posts!) but I did this one on Dubset, a site that legally posts DJ mixes for free listening:

Dubset Pays Everybody But How Will They Get Paid?

I'm having some struggles at Hypebot matching reader interests and it seems connected to headlines.  Maybe I should have put business model in that headline at Hypebot but I've seen coverage of this company with everybody asking that question but, so far, I'm the only one who's addressed what they're doing and can do in the future.

I just hate having to do the 7 Top... and How to Market Your Music on... but I'm just not sure how else to break through the noise and catch attention on that site.

 

Web Business Models: Freemium, Twitter, Google's Click-To-Call, Netflix X Music Industry?, Journalism

Freemium Revisited: Paying For Content-Based Applications

How Twitter Can Save $50 Million: Forget TweetDeck,
And Go Freemium On Its API

Twitter Introduces Text Ads

Google's Click-To-Call Spurs Big-Ticket-Item Buying Spree

Can Netflix Serve As Model For The Music Business?
Billboard vs. Black Rim Glasses

Hard economic lessons for news

Business Model Links: Kiip Rewards Network, Judge Slaps Righthaven, What is Freemium?

Now that I'm starting to dig in at All World Dance, I won't be posting here so much but I do have some plans for future posts and will also be periodically dropping relevant business model links such as the following.

Nice step forward by Kiip mobile "Rewards Network" who offers offline rewards for online game play.

Copyright troll Righthaven's twisted business model is attacked by judge who is interested in such subtleties as providing a "forum for the orderly, just, and timely resolution of controversies and disputes" rather than facilitating Righthaven's extortion tactics.

Pascal-Emmanuel Gobry explains "What Is The Freemium Business Model?"

Federated Social Networks: Privacy & User Control as a Business Model

Diaspora's Homepage Graphic

Some of my favorite folks on Facebook are the ones who sound the alarm about new privacy violations and share the details of how to block that sh*t with detailed explanations of how to navigate Facebook's unfriendly user interface. It's make me wonder, whatever happened to that Diaspora project that got so much press? In case you've been wondering, Diaspora is now in Alpha and the Electronic Frontier Foundation has provided a nice introduction to the federated social network space that includes Diaspora:

"Ultimately, what we want to see in the long-term is for users to gain more control over their activity online. Unfortunately, giving facts, photos, locations, and other personal details to monolithic, company-owned social networking websites — whose business models are generally based on gathering, using, and monetizing data about you; and which may be vulnerable to government pressure tactics — will always be a trade-off. That's why there's a great deal of excitement around a new path for social networking online, known as 'federated social networks' or 'distributed social networks.'"

I can't even remember what Facebook privacy snafu helped get the Diaspora ball rolling but it seems like every few weeks I hear about something new that I have to do something about to keep Facebook from enrolling me in some marketing scheme or simply exposing something new to the world that I planned on keeping semiprivate. It seems fairly likely, given the range of stories about use of social media in recent uprisings, that we will eventually be getting stories about how intelligence agencies used Facebook to identify folks they then imprisoned and tortured.

Basically the likelihood is that an ongoing range of privacy abuses will make it really easy for entrants who are truly protecting privacy to gets lot of free publicity. And that is what will be needed by any company who is ultimately going up against Facebook, the Mighty Monolith!

Privacy services online are definitely something I hope will grow and find solid business models. Given that much of this activity seems steeped in volunteerism, my guess is that Enterprise oriented approaches like StatusNet will be the most likely to develop sustaining streams of revenue. But it's pretty darn easy to envision a social network that allows you to control all uses of your data setting the stage for a paid permission marketing approach in which users would receive micropayments in return for allowing ads and the like to be shown in their accounts. Easy to envision but definitely a challenging process to get right. But that's what will help turn such a project into a really big business.

Such a development would also give further impetus to content marketers and branded content that users, aka humans, will enjoy passing along.

Given that I hate Facebook and find Twitter annoying, maybe I should turn early adopter and join some of these new projects. I'll let you know!

Blogs: Diaspora ~ StatusNet

Dropbox: The Business Model of a Magic Pocket!

Dropbox Intro: The "Magic Pocket"

Dropbox, an online storage site that's gotten lots of positive attention from the tech press, which is how I heard of it a while back, recently got some more attention from Fortune writer JP Mangalindan as "the hottest startup you've never heard of." Man, I feel so in the know right now!

The news is that the company is doing great and has made bank with only a $7 million investment while other investors are trying to get in on it. Dropbox won't say how much they're making but SalesForce.com CEO Marc Benioff claims that they could hit $100 million in sales this year which made for a snappy headline at Business Insider!

Here's a bit about their business model, including marketing, from Mangalindan:

"Silicon Valley insiders attribute Dropbox's success mostly to word of mouth and an attractive referral program. The service uses a 'freemium' model where the first two gigabytes of storage is free (more capacity costs up to $20 a month), but for every friend who signs up for a free or paid account, both the referral and the referrer get an additional 250 MB. Dropbox also earned some choice product placement: It's a featured app in the Apple App Store."

Though none of this splash of coverage discusses it, one should also note that Dropbox has a platform element with numerous current news items and press releases focused on services that can utilize Dropbox. Being a platform is a big thing in a business model!

The news inspired Chris Dixon to share some thoughts about why he never tried to invest though founder Drew Houston gave him an early look prior to joining Y Combinator. Chris was wondering how could yet another entry in the then very crowded online storage/etc. market make it and so didn't pursue the opportunity. Looking back, he says this is one of the reasons he's more focused now on people rather than ideas and has a "strict rule to only invest in teams".

Of course, he doesn't say Drew had a team which makes me wonder if he would still pass but the big point here is that highly capable people can enter a crowded space, as we currently have with things like mobile payments and daily deals, and emerge victorious. I think they should have ideas as well. Houston had the idea that he could do the thing right and he did.

It's nice to know that "having an MIT storage guy who builds a great product actually matters". Who'd of thunk it?

Business Model: awesome people, great product, freemium offering, platform development, devoted fans = Victory!

Site: Dropbox ~ Pricing ~ Features

B2B BizSpark Startups: ActionFlow, iFacturas, dotbox

I've been checking out the Microsoft BizSpark Startup of the Day blog and finding a lot of interesting startups including the following focused on B2B services:

BizSpark Startup: ActionFlow

"ActionFlow.com is a place on the web where you can find an extensive set of pre-defined business processes that are immediately actionable. A process is a sequence of tasks that have to be done for things to happen in your business. It's like a GPS system for your business. A system that will tell you, step by step, what you have to do to reach your destination."

Sites: ActionFlow ~ Pricing

BizSpark Startup: iFacturas

"Our mission is to help self-employed professionals stop losing time and money, by providing his loved smart-phone with an compelling new invoicing and accounting as a service in the Cloud....100 millions of self-employed professionals can use smart-phones as their primary computer, allowing them to invoice at the point of service and on the go."

Site: iFacturas

BizSpark Startup: dotbox

"I hear a song in a bar, so I want to buy it immediately, or I see a cool pair of sneakers on a contestant on American Idol, and I want them, or to tell my friends. Our Social Commerce platform – called 4CsX (where the Four C’s Cross – Commerce, Content, Community and Context), can help brands, retailers, publishers and other start-ups create innovative services and experiences that support the concept of 'making life buyable' by merging social tools with the shopping experience, be they online, on the go, or in retail stores."

Sites: dotbox ~ services

Rent The Runway: Introducing a New Business Model

Rent The Runway Cofounders Jennifer Hyman & Jennifer Fleiss

Mixergy's Andrew Warner has an awesome interview with Jennifer Hyman and Jennifer Fleiss of Rent The Runway, a high quality fashion rental service for women. I'm going to wait on the transcript for quotes but they really dig into the details of coming up with a new business model and dealing with the issues of convincing both suppliers and customers that this new model was worth trying out. Apparently they have been extremely successful with 750,000 members (100,000 within two weeks of opening!) and great press coverage.

Rent The Runway launched a college rep program, RTR on Campus, back in June, 2010.

Official Sites: Rent The Runway ~ Blog ~ Tumblr

Related Flux Research Coverage:
typeF.com: Tyra Banks Helps Demand Media Trump Content Farm Accusations

Founders At Work: Flexible Approaches to Entrepreneurial Business Models

Jessica Livingston - Founders At Work

Jessica Livingston's Founders At Work: Stories Of Startups' Early Days is a really excellent book of interviews with founders of key technology companies that helped build the web, from Apple to PayPal to TypePad, making it also an oral history of the creation of an infrastructure and tools for web publishing.

Many of the interviewees are programmers who became entrepreneurs and belie the cliches regarding everyday programmers' communicative abilities, though Joshua Schachter of Delicious does talk kind of like a machine and Philip Greenspun, cofounder of the defunct ArsDigita, explains why most programmers are conditioned to be unlikable commodities.

Since my web projects typically involve off-the-shelf services with html I can tweak, I haven't gone through the process of learning to work with programmers on web projects where they hold the key knowledge cards nor have I worked with offshored workers. However, I do have some limited experience of working with programmers on mobile projects and I'm convinced that building positive relations with key programmers is crucial to survival in web publishing. On a related note, the more you know the better because programmers will test your knowledge and do tend to propose solutions that they are capable of implementing as opposed to the best solution.

On the Need for Flexible Business Models

There are many aspects of Founders At Work as a whole worth discussing but one that's relevant here, even for someone starting a basic blog, is the fact that many of these companies started with a particular development focus or business model or general plan for making money that was discarded as more solid opportunities emerged.

Such opportunities were often indicated by customers and potential customers who were sometimes initially ignored before the founders could make the adjustment, which is not to say that these founders were necessarily obstinate. The most promising possibilities for true entrepreneurial endeavors are not always obvious because they're new to the world or new to the individuals involved.

The ability to adjust to an unknown reality is a trademark of many of these highly successful founders that Livingston interviewed and a few striking examples are especially worth considering. Though I refer to flexible business models what is key here is flexible thinking and acting regarding business models whether or not your initial business plan indicates such possiblities.

Philip Greenspun: ArsDigita

Philip Greenspun relates that he was creating software tools in the mid '90s to facilitate a website with a discussion forum about photography (pp. 318-19). He wasn't planning to build a business but saw that many other webmasters were struggling to set up such services, as well as registration and ecommerce, and made his software tools available for free as an open source product.

Eventually he started getting contacts from corporations who wanted to pay him large amounts of money to set things up and so was born the business model of offering free or low cost open source software packages and then monetizing those products through paid services.

Max Levchin: PayPal

Max Levchin's PayPal service was initially launched for Palm Pilots and he got funding for the company with a plan to continue to develop for mobile devices (pp. 5-6). But the website that they developed as a demo kept attracting folks who were trying to use it while the mobile users soon peaked. Soon Ebay sellers were trying to use it for their needs and Levchin says the initial response was to turn them away!

Eventually he and his cofounders recognized that these folks could be customers. They focused on the website and eventually ended the early version of their mobile offering and became an incredibly successful service.

Business Model Flexibility

Such examples recur throughout the book and often involve people launching with one approach and, ultimately, taking a different approach based on encouragement from users and/or potential users. This is a somewhat different issue from listening to and observing customers to develop particular features. That's also very important but having a flexible business model is about being willing to change one's preconceptions and sometimes even leave behind what one knows best.

Google is an excellent example of a company that began with a focus on search, monetized that with contextual ads and then eventually used that technology to develop an ad network. Later they began to develop services that went beyond search, such as Gmail, that also became quite popular. But as Gmail creator Paul Bucheit points out, many of his fellow employees resisted the idea of Gmail because they felt that Google should continue to focus only on search.

Though Gmail also presented different technical issues, it has become a strong platform for deploying search and contextual ads. Google's moves into news and book scanning can be also be viewed in terms of search and ad opportunities but could be considered moves into web publishing as well.

But I'm Just a Blogger!

You don't have to be going for venture capital or even writing business plans to benefit from these tales of tech startups. For example, my most successful blog, ProHipHop, began with a general focus on hip hop business news across industry sectors. While that attracted attention, I eventually realized that hip hop marketing was where hip hop's broad reach could be most readily observed and focused on that aspect.

Focusing on hip hop marketing at that time allowed me to interest more people involved in hip hop business while also affording me an opportunity to reach out to marketing professionals in other arenas. Though the twists and turns of the ProHipHop saga undermined that development, having an openness on a thematic level offered me the opportunity to build a much stronger relationship to a much larger audience.

Unfortunately, I did not take such a flexible path to monetization and so missed out on what now would clearly be the most profitable path to building ProHipHop. In the early days, as now, the majority of ProHipHop's income came through ad networks which allowed me to focus on news gathering and writing while the networks focused on ad sales.

Periodically I would receive contacts from folks who wanted to advertise on my blog but I didn't have an ad server and wasn't really able to effectively meet people's needs. Though the launch of Blogads appeared to offer a solution, for a number of reasons which included a confusing interface, Blogads never emerged as a successful solution to individual ad sales.

Rather than biting the bullet and stepping further outside of my comfort zone by tackling the ad server issue, I continued to focus on the things that I wanted to pursue and turned away from potential customers' requests that would have required me to find and work with someone who could take care of the technical issues involved with ad serving which, when all is said and done, were not exceptionally large problems. That was probably one of the worst decisions I made during ProHipHop's early years.

So, during that time, my thematic flexibility was successfully implemented but I dropped the ball on the key survival issue of monetization. I will return to lessons learned at ProHipHop but, for now, my main point is that holding on too tightly to what one believes is the correct path or being unwilling to expand beyond one's comfort zones can undermine one in the long run.

Even the Worst Drag Queen Can Find an Audience

Being flexible is just one aspect of success and the startups chronicled in Founders At Work had the potential to go under even after finding the right business model. The reality is, while many experience launching a project and receiving only blank looks and disinterest, the bigger danger is in getting enough encouragement to convince yourself that you're on the right path when you're only pleasing a handful of people.

Of course, sometimes a handful of people is all you need but that's a topic for a future post as we continue to explore flexible thinking and web publishing.

Originally published at This Business of Blogging.