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Managers of digital operations must also deal with journalists who are able to establish a following on the basis of their own talents rather than the prestige or reach of the news organization. Andrew Sullivan’s Daily Dish was responsible for one million monthly unique visitors, or about 20 percent of the traffic, at The Atlantic’s site. But it was Sullivan’s audience, not The Atlantic’s; the blogger owned the brand equity. So when he moved to The Daily Beast in April 2011, he took his unique users with him. This phenomenon isn’t entirely new, of course. Columnists like Walter Winchell would change employers in the glory days of the 1920s tabloid wars. But in digital journalism, audiences can follow stars with great ease, and conceivably journalists with big individual followings could begin to keep, and try to make money from, data about their readers, rather than leaving that to their employers.
DVorkin says he is changing the way he judges the quality of a reporter. “It used to be a question of how they develop their sources. Now it’s how they develop their sources and their audience.” He expects Forbes journalists not just to cover news, but to be “maestros” of comments and of followers. And they have to be recruiters. “When we used to hire a reporter, we’d say, ‘Show me some clips.’ Now I say, ‘Who is in your orbit? Who are your sources? Who do you know? Who can you convince to contribute?’”
The brutally competitive nature of digital journalism also extends to advertising sales, and many traditional media companies have a hard time justifying a large commitment to the effort simply because the returns, at least initially, can be so small. Consider the case of a company that publishes family-oriented magazines and a website. The company (which asked for confidentiality in return for providing its data) runs a profitable monthly print magazine, with free distribution of 400,000 copies within a top-five metro area. But its attempts to replicate its success on the web haven’t worked out. The site associated with the publication gets 200,000 unique users and 1.5 million page views per month. The expenses associated with the site amount to only around $181,000 per year, but that isn’t quite covered by its ad revenue. Indeed, digital advertising accounts for just under 4 percent of the company’s $4.68 million in annual ad revenue. Of the company’s 1,500 ad clients, 100 are online, and of those, only about ten advertisers are exclusively digital.
LIN Media sells an estimated $30 million in advertising from its web and mobile efforts; that represents about 7 percent of total revenue, or a significantly larger percentage than many other local broadcasters claim. But to put that figure into perspective, compare it to automobile advertising, which typically accounts for about 20 to 25 percent of total ad revenue for local broadcast companies.
These companies face an ongoing dilemma. If they didn’t make an effort to sell digital advertising, they wouldn’t lose much income—for now. But they believe that digital delivery of their content is bound to grow over time, so they are investing in working out pricing and customer relations even though the immediate return doesn’t justify the effort. Whether they can play out these digital advertising calculations successfully depends on the quality of their management.
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