The Forbes sale will be another sort of bellwether ... on the new model of editorial economics.”
It’s become a model of digital publication
Forbes magazine has put itself up for sale, and a deal is expected soon — most likely with a Chinese company called Fosun International Ltd., an investment conglomerate that likes to call itself the Berkshire Hathaway of China.
In some ways, Forbes, at least the paper magazine, is like News
week or Businessweek, a shadow of its former self, sold in a distressed market. Forbes has been offered far and wide and seemingly only attracted the serious interest of a non-publisher.
On the other hand, Forbes is no longer principally a paper magazine. Rather, it has transformed itself into a state-of-the-art digital publishing model, one that strains for traffic and revenue growth while minimizing the cost of content. Most of its “contributors” are paid nothing at all. A portion of its content, in fact, comes from organizations that pay Forbes to post it — and Forbes has been caught in several embarrassing conflicts.
Most native digital content sites (sites not just importing content from old-media properties) are doing some form of this sleight of hand, generally in a less blatant fashion than Forbes, but all with an eye on the brutal economics of rising costs of traffic and lower advertising rates. In this storm, Forbes‘ particular shamelessness is something of a beacon.
The Forbes sale will be another sort of bellwether, putting a price tag on the new model of editorial
economics.
There has not been a significant pure-play content sale since AOL bought The Huffington Post in 2011 for $315 million. Business
Insider, a fast-growing business news aggregation site with an aggressive traffic strategy, has been quietly trying to sell itself for the past few months but with no takers at its reportedly $100 million price.
Other then rumors of great wealth for traffic aggregators
such as BuzzFeed, Gawker and Upworthy, it is quite unclear what they are worth.
Forbes in print form was once worth several billion dollars. Now its magazine has, at best, nostalgic value. So reports that the new
Forbes was hopefully looking at a $400 million or $500 million sale on the strength of its digital accomplishments have buoyed the digital content market.
Indeed, the digital journalism business has been distinguished most recently by the number of new start-ups in the field, and by well-known journalists leaving traditional brands to join new digital efforts. There is even a sense that there is a new science to digital publishing, that the code has been broken.
Forbes is the looking glass example of this “science.” Looked at one way, by being aggressive or shameless, it has built a platform that offers the use of its brand to virtually anyone in a public commons sort of way. Thanks to the sheer volume of free content and opinions alone (and with artful top editing — i.e., headlines that encourage clicking), Forbes generates lots of low-cost traffic and views, against which low-priced advertising is sold.
That’s the business in a nutshell: keeping your cost of content lower and cost of traffic lower than the low rates you’re getting for each view. But looked at another way,
Forbes is an obvious fraud. It is not a magazine or editorial operation at all. It is just, in effect, a user comment site that allows commenters the pretense of saying they have written for Forbes. Or, even, for paid promoters to write laudatory articles for Forbes about whatever they are promoting, then to say, in further promotions, that Forbes lavishly endorses such-and-such complete baloney.
Forbes itself can defend what it is doing by saying publishing has always been supported by a commercial ecosystem and that within this, Forbes does maintain a discrete staff producing actual journalism. And, indeed, that is the defense, albeit an uneasy one, of most of the new digital content businesses: They are trying to figure out a balancing act between earnestness and shamelessness.
The balancing act, too, is between staying in and an exit.
That is, are these businesses that are trying to create commercial and editorial paths that can coexist? Do they see that as an actual possibility? Or are these businesses pushing content and traffic cost ratios to the point of absurdity, at which propitious point they sell? This could be for a desperate reason — because they do not believe there can be a legitimate editorial business within the economics of the digital world. Or it could be for merely cynical reasons — that there are lots of dumb buyers out there now.
Forbes has recently been dampening expectations about its sale price. Instead of $400 million or $500 million, the deal seems likely to be significantly less than that.
Then there is its reported Chinese buyer, which might appear to be more like a whale-size Forbes “contributor” ready to make the brand its willing mouthpiece rather than a publisher with a fine touch.
This all might seem terribly discouraging for people in the publishing business. But then again, respectability is an old model.