Revenue 2.0: Practical solutions

My apologies to regular readers for the scarcity of posts at this blog lately. Being “communities editor” at the Globe is taking up every minute I have and then some. I realize it’s not much, but here’s a recent post I wrote for the Nieman Journalism Lab

As almost everyone is well aware by now, there’s been a never-ending roll call of doom in the newspaper business for some time — papers closing, companies filing for bankruptcy, massive layoffs and so on. Some have chosen to deal with this by clinging to the old “accentuate the positive” approach, but the most optimistic signs by far have been the journalists who are forging ahead (such as the InDenverTimes, an online startup staffed by laid-off Rocky Mountain News reporters and editors) and trying to come up with concrete solutions, instead of moaning about how much better everything would be if we could only convince people to pay 50 cents every time they read a story on a newspaper’s website.

One of the most recent efforts at developing practical solutions was the Revenue 2.0 project, which came together for a brainstorming session last weekend in Washington, D.C. aimed at revenue-generating ideas that newspapers of all kinds could implement right now. The project started with a manifesto, in which the group declared that “unlike recent confabs of executives, editors and academics, we are hands-on professionals charged with delivering media solutions every day” and added:

We reject the belief that media companies should pursue models based on pay-for-content plans or philanthropy. The latest report from Pew concurs. Instead, we believe the best hope for media companies to make money is the old-fashioned way — by earning it from advertising.

The group was brought together by Alan Jacobson of Brass Tacks Design and Matt Mansfield of Northwestern University’s Medill School of Journalism, a former deputy managing editor of the San Jose Mercury News. They set out four practical goals.

(read the rest of this post at the Nieman Journalism Lab)

Facebook: Losing money, but so what?

My friend Kara Swisher at All Things D has some juicy details from a recent all-hands meeting at a theatre near Facebook headquarters in Palo Alto. Apparently the shyness that Scoble remarked on when he met Mark Zuckerberg in Davos must have been a temporary thing, because it sounds like Marky Mark was more than happy to chatter about the dollars flowing through Facebook’s bank account.

Apparently the site is expecting to have revenue of about $150-million for last year, which was widely expected. But Mark said Facebook is looking for twice that this year, if not more. And he’s going to need all that revenue, because he also said capital expenditures are going to be about $200-million. For what? Maybe some more telephone operators to handle all the switchboard calls when they unveil the next Beacon. In any case, as Kara notes that will leave the site in the hole cash-flow wise.

But what does Mark care? He got $300-million or so from Microsoft and Li Ka-shing and people like that, and his company is valued at %15-billion, which means he’s worth a few billion at least. Good times.

Zuckerberg: We don’t focus on revenue

I know everyone is obsessed with when Mark Zuckerberg is going to announce the winner of the “Dance with Facebook for $10-billion” contest, but I found something he said during his interview with John Battelle interesting. He said:

“We don’t focus on optimizing the revenue we have today. It has always been our philosophy to run the company at around break even as we grow.”

This reminded me of what Jim Buckmaster and Craig Newmark have always said about, which is that they basically spend zero time thinking about how to “monetize” all the eyeballs and pageviews they get (about eight billion a month or so) and spend close to 100 per cent of their time thinking about their users and what they want and need.

That drives Wall Street types and venture capitalists crazy, and people like to use those quotes to make a point about how unrealistic Web 2.0 businesses are, etc. etc. — but from a certain standpoint it makes perfect sense.

Not that you shouldn’t be thinking about a business model, obviously. But that can’t be your number one concern. If it is, you will almost certainly produce a crappy service that eventually fails, because no one goes there.

Craigslist racks up another $75-million

The ease with which Craigslist can boost its revenues truly boggles the mind. According to several estimates, the privately-held classified provider controlled by founder Craig Newmark and CEO Jim Buckmaster already has annual revenues of about $150-million — and that’s from charging $25 for job listings in just a handful of cities, and $75 for a listing in San Francisco, as well as $10 for listings by apartment brokers in New York City.

Now Craigslist is adding fees in four more cities — Chicago, Orange County, Sacramento and Portland. So that’s another $25 per listing in all of those centers. And the classified site, which pushes a mind-blowing eight billion web pages or so every month, is already making $150-million or so from seven cities. Even if you assume that places like Orange County and Portland aren’t going to produce as much income as Boston or Los Angeles, I figure that’s still going to boost revenues by close to 50 per cent.

That would put the company’s sales at more than $200-million — and this from a company that consists of about 20 people working in a renovated house in San Francisco, and a couple of hundred servers somewhere. All you have to do is multiply some of those revenue numbers a bit and you get into some pretty amazing territory, as Startup Boy wrote awhile back. And I would expect that even after adding all those cities, costs at Craigslist have barely gone up.

It’s too bad that Jim and Craig have no interest in making billions of dollars, as they continually tell people — including the audience at mesh 2007, where Jim was one of the keynote speakers. Those guys are enough to make a Wall Street broker cry.

Google to Yahoo — Nyah nyah

Well, all the nervous hand-wringing about Yahoo’s poor results and what they might mean for Google turns out to be unnecessary. The search behemoth turned in a stellar quarter that thrashed analysts’ estimates fairly soundly, and there was no mention of any weakness in advertising (which Yahoo blamed for its 37-per-cent drop in profits). In fact, Google not only didn’t feel the same pain as Yahoo — it helped dish some out, by continuing to take market share away from Yahoo in ad-related search.

Thanks to Google, people are probably getting used to the idea of a company with almost 10,000 employees and revenue of more than $8-billion doubling its profit and boosting its sales by 70 per cent in a year — even though that is almost unheard of. I think Microsoft in its heyday was probably the only company that grew like that and managed to keep it up for any length of time. In any case, it is so unusual as to be almost freakish.

Another thing that sort of jumped out at me as I looked through the numbers: Google went from having 7,900 or so employees last quarter to 9,450 or so this quarter — meaning it hired about 1,500 people in three months. That’s an average of 500 people a month, or about 25 people every working day. That is mind-boggling. For better or worse, there is nothing like this company out there right now, anywhere.


Blogging Stocks live-blogged the conference call. And even my friend Paul Kedrosky — not an easy audience — thought Google’s results were pretty darn good.