USC Annenberg Online Journalism ReviewUSC

Behind Closed Dot-com Doors
A content site balances business interests and journalistic credibility

For those of us who still believe in the promise of online content sites, the Mar. 2 sale of BabyCenter from online toy retailer eToys to the baby goods manufacturer Johnson & Johnson was significant on a number of levels:

(See related story: The Fuzzy World of Sponsored Content.)

• If you're pregnant or a new parent, there's simply no other site on the Web that comes close to offering the breadth of trustworthy editorial content, expert advice and baby products that BabyCenter offers to its 2.2 million visitors each month. (Its nearest competitors draw only one-fourth the traffic.) The 4-year-old site, which faced the prospect of shutting down alongside its ailing corporate parent, can now not only grow but thrive.

• The sale sends another strong signal that even the most successful pure-play content and commerce sites may not be able to survive without the support of a deep-pockets parent or brick-and-mortar partner. The site has won three straight Webby awards, but has still not achieved profitability.

• The sale also rekindles the debate over a corporate owner's effects on journalistic standards. Simply put: Can a content site retain its independent editorial voice when placed under the control of a corporation with a stake in the site's core offerings?

The long-running debate about corporate control of content sites (most notably, Microsoft's ownership of Slate and MSNBC) and the discussions about separation of church and state online rarely get into the nitty-gritty of what really goes on behind closed doors at these places. I'll take you behind the doors of one content site in a moment.

Let's begin this discussion of business ethics and journalistic credibility with a disclosure: I headed the editorial department at BabyCenter for a time and left the company 13 months ago. When I predicted six weeks ago that eToys would sell BabyCenter to Johnson & Johnson or another major corporation, I had no inside information that J&J and BabyCenter were already in serious discussions.

But I did know that J&J had expressed interest in buying the site back in the spring of 1999. Instead, BabyCenter and negotiated a term sheet for Amazon's partial ownership of the company. That deal fell through when eToys made a more lucrative offer.

While a few employees at the time expressed disappointment that BabyCenter would not remain independent, most of us recognized the difficulty of building a mass audience and a profitable business with a stand-alone content and commerce site. Great content without a visible platform is a losing proposition.

What we never anticipated was that eToys -- the leading toy retailer on the Web last year -- would crash and burn in such a dramatic fashion. The company offically filed for bankruptcy protection on Mar. 7.

Life Under eToys

For 18 months, life as a business unit of eToys was good -- and not just because of the high-flying stock price. Based in Santa Monica, Calif., eToys had a reputation for having a savvy management team, the most user-friendly toy site on the Web, and ferocious dedication to customer service. To strengthen its Web offering, it hired the editor-in-chief of Child magazine to become eToys' vice president of editorial.

But from the beginning it was understood that the company's two divisions had dramatically different missions: eToys was strictly an online store with consumer-friendly product information. BabyCenter, based in San Francisco, remained a hybrid operation: an editorial site with great pregnancy and parenting content and a store selling baby products. The content side has always been more popular, and that remains true today: In January two-thirds of BabyCenter's 64 million page views were on the content side, one-third on the store side, according to PC Data.

eToys proved to be the ideal absentee corporate parent, letting us do our own thing; tightening the purse strings now and then but never interfering with the site's mission to be the most trusted parenting resource on the Web. "Trust" was a word we used every day as we created an encyclopedic database of articles, expert advice, columns, tools and other editorial content with a staff of a dozen editors, writers and researchers working with free-lance writers and a medical advisory board of obstetricians, pediatricians, developmental experts and nutritionists. The site also sends out 9.7 million e-mail newsletters a month, and a staffer writes a weekly news roundup on subjects such as children's health, toy safety, nutrition and related topics.

Creating high-quality editorial content doesn't come cheap, however, and BabyCenter knew early on that banner advertising wouldn't foot the bill. So the business team pursued multiple revenue streams, including sponsored minisites, product pages, newsletter ads, revenue-generating partnerships and the like. (See related story on sponsorships.)

I still have the notes from one meeting where we tackled some of the thorny ethical questions faced daily by content and commerce sites: Should we monitor the bulletin boards to edit out negative consumer comments about products we offer? (The decision: no.) Would we allow advertisers to influence the content of our buying guides and product comparisons? (No way.) Would we allow blind links to advertisers' product pages or minisites to increase traffic to those pages? (No, we'd always identify these to our users.) Would we allow clearly marked links to sponsored pages to show up on related editorial pages? (Yes, but only when they offered value to the user.)

What might surprise outsiders is how forcefully the business side agreed with maintaining editorial credibility. At one point the store's merchandising manager said, "Look, we don't want a site where we bow to advertiser pressure to rate products a certain way. That's where our credibility comes in. Our buying guides, our product ratings and our content are not for sale. If our users or our expert advisors have a problem with a product in our store, let me know. If we can't stand behind it, we won't carry it."

That philosophy -- of being honest with our users and putting their interests ahead of short-term financial gains -- permeated the company's ranks, from the CEO to the interns. Trust the users, and in turn you'll gain their trust.

Now that philosophy will be put to the test again, under the stewardship of J&J.

Promising a 'Hands-off' Approach

From all indications, the new owners are off to a good start. Sarah Colamarino, a vice president of public relations for J&J, says the company bought BabyCenter "to gain access to some superior Web-based content and the personalized relationships that BabyCenter has with its subscribers. The site will continue to run as an independent unit, and the same people who've been running the site will continue to do so. We're taking a hands-off approach."

J&J, which has about 99,000 employees worldwide and recorded sales of $27.5 billion in 1999, paid $10 million for the company and plans to operate BabyCenter and its sibling site ParentCenter with the current staff of 55, a dozen of them in editorial. As for the editorial department, Colamarino says, "We won't be making any changes. The plan is to continue running the site as it has been."

Lara Hoyem, spokesperson for BabyCenter, echoes that view. "The mood here is very optimistic," she says. "They approached us and there were two things they emphasized. First, they valued our editorial integrity and didn't want to mess with our relationship with our audience. Second, they wanted for us to maintain our unique corporate culture. They're very conscious of the need for us to maintain our independence. ... We're certainly not going to become a marketing arm for J&J and their products."

That makes good business sense, of course. BabyCenter's value as a trusted source of pregnancy and parenting news and information would be greatly diminished if there's even a hint that the site's editorial content has been slanted to promote its corporate parent's products.

But even the best intentions and a favorable track record -- J&J has a reputation for enlightened management -- won't matter if actions aren't taken to safeguard the site's editorial independence. And that means taking specific steps to head off not only real conflicts of interest, but the appearance of any.

Perceptions and Realities

James Naughton, president of the Poynter Institute for Media Studies in St. Petersburg, Fla., says that a news and content site has a difficult task in maintaining a reputation for even-handedness, and a perceived agenda by the corporate owner only serves to increase readers' suspicions.

"One of the things we journalists tend to worry about the most is how credible we are," he says by e-mail. "Nothing would diminish our credibility more or faster than to have everyone in the audience uncertain about the independence of our reporting. To be owned by a company that has a clear interest in putting a spin on the news coverage of that company or subject would be a serious concern, even if the company did not try to put a spin on the coverage. ...

"The hardest thing to do at a news organization often is to write with clarity and comprehension about your self-interest -- or companies and organizations that are rivals. This does not mean that news outlets owned by self-interested companies should just fold up and go away, for every owner has some self-interest. It does mean that news outlets owned by self-interested companies should know they will not have inherent credibility and might profit from developing — and widely disseminating -- clear and unambiguous standards by which the news gatherers should disregard the self-interest."

Media critics have rightly spotlighted concerns about conflicts of interest -- both real and perceived -- when an America Online swallows publications like Time, CNN and Money, or when a GE owns a CNBC or Disney owns Sadly, we're becoming numb to the impact that mega-mergers are having on the free flow of ideas.

Today, it seems, bigger isn't better, but it is inevitable. But acknowledging that reality doesn't end the discussion. The onus falls to us, as employees and as news consumers, to police the behavior of news organizations, content sites and other media to make sure that they keep faith with their audience by hewing to an editorial mission that's not captive to special interests.

Five-step program

Toward that end, it seems fitting to offer BabyCenter some suggestions in handling the transition to a new corporate owner:

(1) Be open with your staff and users. BabyCenter's employees tell me that management has kept them in the loop on the company's travails and sale. The general manager, Mari Baker, had posted a letter alerting users of the company's new ownership. Importantly, she underlines this point: "Johnson & Johnson shares our deep commitment to maintain an editorially independent BabyCenter."

(2) Build a horizontal firewall. While any content and commerce site needs a free exchange of ideas between the business and editorial departments, a new corporate owner raises the stakes dramatically. What happens when the community manager spots a posting on a bulletin board that criticizes a J&J product? What happens when an assistant editor writes an article that extols the virtue of a service or product from one of J&J's competitors?

BabyCenter's executives and managers should make sure that staffers at all levels of the organization get a refresher course in editorial independence, and the top brass should make clear that any objections to site content -- from J&J or elsewhere -- should be funneled through the general manager and shielded from the editorial team.

(3) Post a disclosure statement. Being owned by an online toy store is one thing, but being owned by the world's largest baby goods manufacturer raises the ethical bar a few notches. Disclose your internal policies. Explain your relationship with your owner and business partners. What influence, if any, do outside businesses have on your editorial content? What role does a business play when it sponsors an area of your site? How do your sponsored minisites work? How do you decide what items to stock in your store? Being transparent can only enhance the users' confidence in your site.

(4) Respond to users' concerns. When users sound the alarm about a perceived conflict of interest or corporate self-interest, don't shrug it off, no matter how unwarranted. People are incredibly protective of their BabyCenter, and they'll be looking for signs that the new owners are slanting coverage or exerting their influence unduly. A new round of gaining and maintaining readers' trust begins today.

(5) Think small. A certain hubris can set in from being part of a multinational, multi-billion-dollar corporation. Resist that. Focus on your users and their needs. Serve them, and ultimately you'll serve J&J's interests as well.