This didn’t happen when Dow Jones bought MarketWatch. It didn’t happen when the Washington Post bought Slate. But when The New York Times Co. bought About.com from Primedia for $410 million, some pundits were quick to criticize the Times for overpaying for a property they deemed easy to duplicate. About.com has a hoard of 500 freelance “Guides” who write a series of blog posts and articles on everything from Children’s Books to Day Trading.
When the Times announced the purchase, Web usability expert Jakob Nielsen wrote in to PressThink’s Jay Rosen: “The real secret of About.com is that they have figured out a way to get 500 domain experts to work for peanuts, in return for the exalted status as ‘Guides.’ But the NY Times could probably have done that on its own by throwing a little prestige and a few thousand dollars at the top bloggers in each of the targeted areas they wanted to cover. Somebody who already has a prestigious brand could duplicate About.com in a year for less than $50 million. And anybody could do it in two years for $150 million.”
And Poynter’s Online News mailing list lit up with new media types aghast at the purchase. Adam Gaffin, executive editor of Network World Fusion, told me off the list that he did see some merit to the move as adding traffic and ad inventory for the Times. But still, Gaffin couldn’t help himself in an e-mail to me: “Are they out of their frickin’ minds? They’re paying $410 million dollars for a bunch of Weblogs! And in 2005, no less! Yes, it takes time to build up a brand and the resulting page views. But Nick Denton shows how it’s possible to do it in a fraction of the time it took About.com at a fraction of the cost. Imagine Denton set loose with, oh, only $100 million.”
While Rosen and others talked to Martin Nisenholtz at the Times, few reporters bothered to directly ask About.com what they thought — even as they were in the eye of the storm. (Forbes.com senior editor Penelope Patsuris says About.com was not willing to talk after the sale, referring her to the New York Times.) I talked to both the current CEO of About.com, Peter Horan, as well as a former editor, Gian Trotta, who both filled me in on the history of the site and its current incarnation.
Trotta, who now is managing the Web presence for Infinity Radio’s WCBS 880 AM in New York, told me that About.com wasn’t originally run by content people and that the Guides did work for very little compensation in the early days — except for stock options.
“I went nuts trying to teach the Guides grammar and journalism,” Trotta said. “The real key is not that the Guides weren’t necessarily great journalists, but they had in-depth knowledge of the off- and online facets of their subject areas and were able to present it in a way that engaged, informed, empowered and entertained their audiences over a consistent level, much as bloggers aspire to do now. It also didn’t hurt that About’s first marketing director Victoria Bianchini was especially skilled at teaching viral marketing.”
While the Guides now use a Weblog format for some of their entries, they land somewhere in between unsupervised bloggers and polished journalists, having some editorial oversight and the backing of About.com’s brand name. But the site has a history of using intrusive advertising from pop-ups to poorly demarcated sponsored sections. And don’t get me started on the quicksand of navigation …
Primedia brought in Horan as CEO of About.com in December 2003, after he had headed DevX.com and had worked in the business side at tech trade publisher IDG. Horan, 50, helped optimize the site for search engines, just as the online advertising market started to explode. About.com was in the sweet spot of covering niche, targeted subjects right as targeted advertising and paid search ads swept the Net.
“If the Times and other folks that were in the [buyout] process really thought that they could recreate [About.com] that easily, they would not be stepping up to pay a premium,” Horan said.
The following is an edited transcript of my interview with Horan over the phone and e-mail, as he explained the editorial process — and compensation — of Guides, while giving ample reasons why the Times got its money’s worth.
Online Journalism Review: How does your work at About differ from previous work you’ve done at DevX and traditional publishers?
Peter Horan: About works off a series of Guides, and the Guides are subject-matter experts who create the sites. It’s a little bit different than a traditional blog. Blogs are real personal. At its worst, it’s ‘here’s what I had for breakfast today,’ or ‘here’s how my date went last night.’ People are looking for a platform to talk about their lives.
With the About.com Guides, it’s about the subject. It’s about Japanese cooking, it’s about vacations in Europe. The Guides create the sites themselves, it’s a publish-first model. They work under the guidance of editors. The editors say here’s the subject you’re covering, here’s the type of content we want you to create. It’s a little bit different than the traditional blog network.
OJR: So they post items first, and then you edit them?
Horan: It’s a collaborative process. We send a lot of guidance out. First of all, we say we want to have a site on hybrid cars, for example. We post the job, people apply, they post their credentials, their writing samples. The editors often have two or three folks go into training for that. During training the prospective Guides will start to create the site. At the end of that process, one is given the keys to become a Guide. On an ongoing basis, the Guides are creating content, putting photos up on the site, and periodically they get site reviews — whether that’s ‘attaboys’ or kicks in the butt — they actually work with editors on an ongoing basis.
If you were the Go Europe Guide, you can’t suddenly do movie reviews. You have a specific ground that you’re accountable for. You get some latitude with how you cover that. But it’s not the bully pulpit to talk about you and your life and what interests you at any given moment. So when people describe us as a network of blogs, that’s not exactly it — there’s some nuance to this.
When I got here, About was not coming off its strongest year. In 2002, 2003, a lot of effort was put into doing an AdSense competitor called Sprinks, which was a pay-per-click link business. And there was also a Web hosting business. They had just sold Sprinks, and I was brought in to refocus the business as a content site. In 2004, we put up 3,000 pieces of original Guide content per week. Now we have a total of more than 1 million pieces of Guide content on our servers.
A lot of folks optimized some of their content for search; we were the first network to optimize the entire site for search. We set it up, so that every page off of the front door, whenever you come in, on an article page, you get a strong sense of branding, a strong sense of context — the ‘you are here’ button — an invitation to read other related articles, and navigation. It’s real different than your experience on other sites where you get to an article and it’s a dead end, or a disorienting experience.
We grew our uniques by 20 percent last year. Our page views growth was 25 percent for last year over the previous year. For the fourth quarter, it was more than 30 percent higher. We’re growing a site that was pretty big to start with. Depending whether you believe comScore or Nielsen, we’re hovering right on the edge of the Top 10 [sites with overall traffic]. We’re No. 8 on comScore and No. 12 on Nielsen.
[Note: Nielsen//Netratings sent me numbers showing that About.com grew from having 20,170,000 unique users in January 2004 for U.S. home and work, to 21,776,000 unique users in January 2005 — a gain of about 8 percent.]
OJR: How do you explain your traffic growth? Did a lot of it come from search engines due to your optimization efforts?
Horan: Certainly, a lot of the traffic came in from search. But search is a factor for everybody, and everybody wants to do well in search. And we clearly did significantly better than a lot of other sites in search. It wasn’t just that search got popular, because our boat got lifted higher than everybody else’s boats with the rising tide.
It was putting up 3,000 pieces of original content per week. We make sure that each of those pieces of content is really well optimized. The Guide system is very different than the traditional editorial model. If you cut open a journalist in a typical newsroom, they think, ‘OK, my job is to be a journalist, I’m gonna write a good article, be the expert on a subject.’ But there’s only a certain amount of energy in optimization. Guides work on a system where they’re actually compensated based on page growth. One of things we’ve institutionalized is that folks understand that time they put in to optimize the content is really an investment in their page growth.
There’s been enough success stories with the Guides, that basically they sell each other on the idea that this is a good thing to do.
OJR: Can you talk about how you optimize your pages for search engines?
Horan: We spend a lot of time with the key words. The Guides have a publish-first environment, but they can’t publish if they don’t have the key words in there, the meta tags for the search engines to see. It’s kind of like not putting in your ZIP codes on certain forms, and it’s bounced right back to you. The same thing is true, we’ll bounce it right back if you don’t put your meta tags in so the search engines can optimize it — you can’t publish.
We’ve also invested a lot of time with reporting, what were your search engine refers, how did they track against the rest of the network and vs. what you did last year. We do a lot of stuff just on traffic reporting. We treat optimization like a blood sport. Other people dabble in it; this is how we make our living.
OJR: What about the quality of the content? You’re really focusing on optimization, but do you still have editors looking over the quality of various sites?
Horan: We have an ongoing series of what we call channel reviews. We divide all our content into channels, like travel or health or autos. Recently, we went over our business channel, for instance. There were 10 of us in the room, and the editor responsible for the channel walked us through, and said here’s where we’re doing well, here’s where our competitors are doing well, here’s how our traffic has changed year over year. Here are the Guides who are doing a good job, here are ones who aren’t, here’s some sites I’d like to add, here’s some functionality I’d like to add.
Over the past year and a half, we’ve bought into the idea that we’re only as good as our weakest site or our weakest piece of content. We’re just trying to raise the class average as best as we can.
OJR: How do you decide which new sites to launch?
Horan: That is as much art as it is a science. We look at external factors — we look at things like what are the top searches, what is on Yahoo Buzz Index, what’s showing up on Google. We look at the coverage patterns. About covers 57,000 topics. We were looking at the business channel, and were saying how are we doing on commercial real estate? We have a business insurance site in development, but we don’t have a real estate site. What was the thinking there?
So we ask, gee, is there enough interest there? What are the characteristics of a successful site? We do well with recommendation sites. We’re looking at the house & garden channel, and we realized we don’t really offer advice on how to buy home appliances. It’s something that we do well, it’s something that’s consistent with our audience. Could we do something with how to buy dishwashers, and washing machines, and ovens and things. And what kind of content would we need? We’re always looking at it to see where there’s an opportunity to regroup the content.
Hybrid cars was a good example where we had some articles spread out over some sites. But we thought hybrid cars is a long-term idea, and we really want to focus some energy on it. Since we’re not a news site, our content is evergreen, so we wonder, ‘Is this content that will accrue in value over three or four years?’ And we say, yes, hybrid cars seems like it’s at the beginning of its life cycle. It’ll be nice in ’05, it’ll be better in ’06 — in ’07, I bet it’ll be a big site. I wish I could say we have an equation that tells us the day to launch the site.
OJR: I’m surprised you didn’t mention potential advertising as a factor.
Horan: It’s one of them. For example, this past year, we put a lot of effort in our auto site. And as a result, our traffic within autos went up by nine times between July and the end of ’04. Our business traffic has doubled over the past few months because we thought there was a strong advertiser interest in business. That’s definitely a factor as well.
OJR: Who do you see as your competition? Wikipedia?
Horan: Well, Wikipedia is a non-commercial endeavor. Someone might use Wikipedia as well as our site, but it’s a pretty different beast. In some ways, the portals are our competitors, just like they’re everybody’s competitors. Yahoo’s 90 million uniques is certainly a factor both for readers’ attention and the advertisers. We compete with a lot of very niche sites. So if you’re looking for Japanese cooking, if you’re not on About, you might go to a very focused Japanese cooking site to get a recipe. In autos, we compete with Edmunds and Cars Direct. In travel, we compete with Expedia and Frommers.
OJR: I’ve heard a lot of people say derisively that the Guides work for peanuts. Can you talk more specifically about how they’re compensated?
Horan: It all depends on your definition of ‘peanuts.’ First of all, this is intended to be a second job, or one piece of somebody’s mix. The average Guide, the middle Guide, makes $1,500 or $1,600 a month. A Top 10 Guide might make $10,000 or $15,000 a month. The political humor Guide, during October and November , made $20,000 a month because it was an election year. So we’re well out of the peanuts range.
We have 500 Guides, and if you’re Guide No. 450, you might only make $500 a month. But on a per-hour basis, you might be doing OK because you’re probably not putting in a lot of time. But for folks who are working on their content or working on their SEO [search engine optimization] — doing the stuff they’re supposed to be doing — they can make several grand per month.
OJR: When did you know that the site was up for sale? Did Primedia tell you at some point in that process? Did they hire you originally to revamp the site in order to sell it?
Horan: I am not sure that the Primedia counsel wants me to comment on the process. I was actively involved through the process. It’s one of those questions where lawyers’ sphincters start to tighten.
Primedia is a company that’s been built by buying and selling media properties. You can’t kid yourself that nothing is for sale. Everybody’s for sale at the right price. I moved here from California to do the job, to work for Kelly Conlin, the CEO of Primedia, who I worked for at IDG for 10 years. I did not come cross-country because I thought we were going to sell it.
But it just so happens that we had a great year. Our income in ’04 more than doubled. We’re growing pages, we’re growing uniques, we’re growing profits. If you look at the MarketWatch transaction and some other things, the market for Web properties heated up quite a bit. It was this happy coincidence of the fundamental ad market picking up, our site starting to run well, and the stock market starting to reward people for doing well with online advertising. Primedia started getting phone calls from people saying, gee, are you interested in doing something with About? They get a couple of those phone calls, and they say, sure let’s talk.
OJR: How was it working with Primedia? Were they pretty hands off?
Horan: There was some contact, but it was a somewhat arm’s length relationship if only because a lot of what About was doing on the Web was fairly different than what Primedia’s print publications were doing. It was a very cordial relationship, but it wasn’t an intimate relationship, in how we worked with the print books.
OJR: Tell me how you would characterize your audience and its demographic makeup.
Horan: The audience is typically about two-thirds women, average age 37, a little more than half are married, a little more than half have kids. One of our bumper stickers is, ‘We’ve Got More Women Than iVillage, More Men Than Sportsline, More Teens Than MTV.’ All of which is true. That’s why for us, the link-up with the New York Times is real potent. There’s very little duplication between us and the Times, about 15 percent duplication. So together, we’ll reach about 34 million unique visitors a month. We’re not Yahoo, but certainly it puts us at the top of the heap after the big three.
OJR: Why do you have so many women in your audience?
Horan: I think it’s really reflective of the content. We’ve got a tremendously strong health channel. All of us guys should probably spend more time worrying about our health. It still tends to be women who are more sensitive to health issues, and they drag us by the ear to look at the screen and read the article. That attracts a largely female audience. We are the No. 3 food site. We have more unique users in food than Epicurious, which will bring a female audience. We’re top two or three in education and homework. That will tend to skew a little more female.
OJR: When did you reach profitability as a unit? What do you credit with hitting profitability?
Horan: I don’t think anyone was profitable during the nuclear winter, but we were significantly profitable in ’04. I don’t think in 2001, 2002, no matter how brilliant you were, it was going to be real tough to make a profit in that market. With the recovery market it was certainly easier to be rewarded for running the business well. It was a positive double-whammy.
OJR: Does the Times plan any layoffs due to the acquisition?
Horan: You’d have to ask the Times, but I’ve seen the financials that they presented to their board, and they actually reflect incremental investment in the business — keeping the staff intact and investing in the business. This is about growing, this isn’t about cost savings.
We’re running a lean, almost skeletal organization. Because the Times is committed to growing online generally, and growing About, they have demonstrated a willingness to invest in the business. Right now, there’s 68 employees — 7 or 8 editorial — and 500 Guides, who are independent contractors.
OJR: How do you see the Times and About fitting together, both as sites and organizations?
Horan: I was in the funny position of advocating for them to be a part of the process, initially. Not that I thought they would be the one at the end. They’re up the block from us, we’ve known them a long time, and thought they’d prospectively be a good fit. So I was actually very pleasantly surprised when it turned out that they were the acquirer, because I believe the two organizations are very compatible and the two sites are very complementary.
If you had asked me awhile ago, so what does About do well, I’d say consumer sites and information. We don’t do news, we don’t do sports, we don’t do stocks — and they do that really well. In a sense, they do the front pages really well, and we do the drill-down feature content. They tend to skew more male, more urban. We tend to skew more female, more suburban.
When you put the story together, if somebody reads a news article on the Times, we’ve got the evergreen content that’s the drill-down. When you read an article about the tsunami in Southeast Asia, we’ve got a geology guide who already had great articles about tsunamis, the biggest tsunamis ever, what are the things that cause tsunamis, those were already on our servers. All that stuff is nice and compatible.
OJR: Why do you think the synergy strategy with Primedia didn’t work? When they bought About, it seemed like a perfect fit with all their niche pubs.
Horan: I was not at Primedia or About when the deal happened. I think there were several major factors. About’s audience is very different than Primedia’s. About reaches an audience that is two-thirds women. Primedia’s audience is overwhelmingly male. Topically, we cover health, education, food, travel, technology, and new autos. Primedia’s strengths are in outdoors, enthusiast autos, and performance cars and trucks. Finally, I don’t think we worked out a business model that enabled both About and the publications to succeed.
The good news is that we have learned a lot over time and will bring that knowledge to the Times. We should not experience the same challenges.
OJR: Some people have said that The New York Times Co. overpaid for About.com and that they could have built a similar site for a lot less than that.
Horan: This will all go back to ‘what the hell do they know?’ Let’s go through the process here. We have a million pieces of original content on our servers. What would it cost you to write a million articles? What would it cost you to hire the people to write the million articles, to drive traffic? Worldwide we get almost 40 million unique visitors a month. So how much marketing would you spend to get 40 million unique visitors per month?
Mencken said, ‘For every question, there’s an answer that’s simple, neat, and wrong.’ People say, ‘Sure, you can recreate that.’ But in fact there’s eight years of knowledge in how to run a distributed network. If somebody wanted to do it, we have patents on the Guide system and a lot of the underlying technology. So we’ve spent eight years providing Guides with all the tools so they can publish. We have probably the industry’s most sophisticated ad-serving system.
For the past 18 months, we’ve been serving all the users cookies, and we build the page dynamically based on the cookie we see coming in. You may think it’s no problem to recreate this. But if the Times and other folks that were in the [buyout] process really thought that they could recreate this that easily, they would not be stepping up to pay a premium. Oh, and by the way, there’s the execution risk. Over the next three years, what are the odds that you’re going to do this well and wind up in the same spot?
OJR: Why couldn’t your model be replicated by aggregating some of the blogs that are experts in subjects or niches?
Horan: With few exceptions, none of the blogs have critical mass. For the most part, with few exceptions, advertisers don’t want to advertise on someone’s personal home page, they don’t like advertising in forums, they don’t like advertising in blogs. It’s a media business. Media is about getting to critical mass and about getting advertiser support.