He sold his blog network to AOL for $25 million. And that was just the beginning
You can’t write a history of Web 2.0 without including the contributions of Brian Alvey. After getting his start doing design work for traditional publications like TV Guide and BusinessWeek, Alvey teamed up with his childhood friend Jason Calacanis to launch a series of online publications. Eventually, the two created Weblogs, Inc, a blog network that went on to be sold to AOL. The content management system Alvey built would eventually power AOL’s portal and much of its websites.
But Alvey didn’t stop there; he’d go on to build publishing platforms that would power everything from TMZ to Rupert Murdoch’s ambitious iPad app The Daily.
I interviewed Alvey about what it was like to run a blog network in Web 2.0’s early days, how he ended up in a 45 minute meeting with Jeff Bezos, and why the iPad failed to save the media industry.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
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Simon Owens: Hey Brian, thanks for joining us.
Brian Alvey: Thank you for having me.
I brought you on because you have a long and interesting resume in digital media. I was thinking we could maybe begin with Weblogs, Inc, which you sold to AOL for, I think, $25 million. I don’t know if that’s the exact starting point. What led up to you forming that network?
The quick answer is that I have publishing in my blood. Stan Lee just passed away, and I actually got a tour of Marvel Comics when I was a kid. I always wanted to make comic books, hold something in my hand that I’d published. So publishing was in my DNA, it was in my blood.
So I worked as a magazine art director. I worked doing magazine desktop support back in the 80s and 90s. I always loved that. A friend of mine, Jason Calacanis, we decided to build an about.com, we wanted to have a big network of sites about a bunch of different topics. So that was the deal.
So people might recognize that name, Jason Calacanis. He’s well known as an angel investor and also the co-founder of Weblogs, Inc. How did you meet him?
We were high school friends. I was best friends with his older brother. So he and I would see each other on the subway in Manhattan back when we both went to college. And we kept saying, ‘gosh, we need to work together.’ I was working with BusinessWeek. He was working with Sony. And we just talked about media and publishing. It was his thing and it was my thing too. It just seemed like something we wanted to do, and then we created a magazine together that nobody knows about. And then he created another magazine, Silicon Valley Reporter. I was an art director and a CTO of that for a while. We just worked together on and off.
You were working on the print design before you signed on to work with him?
Yeah, I did four-color design. I always worked with magazines. One of the companies I worked with was called Miller Freeman, and they had like 40 trade titles. When I worked there, they had Kitchen and Bath Business, that was one of their magazines, all about kitchens and baths. They had Guitar Player, the same magazine that’s around today. They had like 50 different topics, and a bunch of different people working on these. And that actually wasn’t all that different from us creating a blog network, with one site about gadgets and phones and another one about cars, another one about video games, one about parents. This was really no different. So we basically built a fleet of magazines, but it was on blog software I built, and that’s why we were a blog company.
You were a designer. How did you learn to code?
I was a kid who wanted to be a comic book artist, and when I went to college, my dad was like, ‘I’m not paying for college so you can have a big ring on your finger that says you know how to draw. If you want to show someone you can draw, then just take out a napkin and draw. You’re going to get a science degree.’ So I actually got a physics and astronomy degree, so I was very technical. So when the web came about, content management systems, building tools that so that people can crank out tons of content, is a healthy mix of design and technology.
Here’s the thing: I wasn’t great at either one. If I compete with someone who’s an artist, they’ll kill me, because I’m like an 8, or a 7. But in technology, they’re a 1, and I’m an 8 or a 7 in that too. So I was pretty well balanced, and the web was sort of a great place for a renaissance man with a science and art balance.
And what was the transferring over point from print to digital? Was that when you launched one of these publications with Jason?
I’ll tell you. I lucked out. A friend of mine actually said, ‘hey, you’ve dabbled in the web a little bit.’ And I really hadn’t. This was 1995. He said ‘hey, TV Guide is looking for someone to design their website. You should go try out for that.’ And after he sent me in, he realized ‘oh crap, I should do that too.’ So he actually went in to the job he recommended me for, and I beat him for this job.
So I had been with BusinessWeek doing all their desktop support, doing databases for their bestseller lists. And then I went next door to TV Guide, and I got to design the first ever TV Guide website. So that was really it. Then I went back to BusinessWeek, and I said ‘guys, you need a website.’ And here’s what they told me in September of 1995: They said ‘we’re on AOL, and if someone spends $3 an hour on AOL, when they’re on our screen, we get $1.50 of that. We’re printing money on AOL. You can’t make money on the web. It’s just content for free. And it’s ugly and gray. It’s horrible. AOL is interactive. Why would we need a website?’
And then a few weeks later, I get a message from BusinessWeek’s webmaster, and he says, ‘hey, does anybody in the support department know the web, because I’m the webmaster, but I have no idea what a website is and what to do, and we need to get these bankers trust tapes online. It’s this big scandal, and we can’t push it through AOL, we have to get it on the web.’ So I helped him build BusinessWeek’s first website. So I kind of lucked into, from 1995 on, only working with brands you’ve known. And that was really the transition, those two sites, taking them from print magazines onto the web.
And how did you end up launching your own publications?
That one magazine that I had with Jason that nobody knows about was called Cyber Surfer. We did a website for that, that was a lot of fun. I worked with Jason, we went through the dot com crash. This would be 2001, 2002. It was kind of miserable. We weren’t working together at the time. And then he invited me to go to a New York Knicks basketball game. It was the jersey retirement ceremony for Patrick Ewing. And we were sitting there, and we kicked around ideas. I knew I wanted to work with Jason — even though it’s not easy, by the way.
So we kicked around a dozen ideas. And two people who had worked with Jason, they had both gone on to do blogs. So blogging was sort of getting hot in 2002, 2003. One of them, who I was a huge fan of, Rafat Ali, he was doing a blog called Paid Content. And it was a one-man blog out of London. And another one was Xeni Jardin. She was working with three guys, and they had this site called BoingBoing. They were off doing these really amazing things. And we watched, and looking at what Rafat was doing, he was making good money. But he couldn’t really expand that business and get that second employee. If you make 50, 60, $70,000 a year, you can do it yourself, but if you add that other employee, what happens if you don’t get any ad revenue for two months? You have to fire them. He couldn’t expand his business yet.
So we said, ‘wait, what if we took the about.com model, what if we had a franchise, a platform?’ So I came up with two names for this. One was Weblogs, Inc, as in weblogs incorporated, professional weblogs, it’s safe to put your advertising dollars here. And the second was Blogsmith, and that was the blog platform. Today, Blogsmith is still running at AOL, and Engadget and Autoblog still run on that, and they moved AOL.com, the portal, onto that platform. Pretty crazy that a 15-year-old piece of software still runs one of the biggest sites out there.
What did you start doing? You started launching these sites. Did you recruit bloggers? How did you start populating the trade blogs?
We did so many horrible things, and I don’t think about them very often. So the site was Weblogs, Inc, which is a pretty long domain name, weblogsinc.com. So we were going to be like about.com, where they had things like cars.about.com and microsoft.about.com. Whatever these topics were, they were the subdomain.
So we had some really disgusting stuff, web domain wise, like medicalinformatics.weblogsinc.com. That was one of our domain names. So when we started out, in the very beginning, the only other blog network that existed was Nick Denton’s, which was Gawker. And I don’t know how many sites he had at the time. I think Gawker existed, Gizmodo existed. We were going to launch a competitor to that. So what we first did, was we put up a one-page manifesto. Jason wrote this thing, talked about how we were going to come and hire people and change the face of blogging. The blogosphere hated us. We were late to the party, we were idiots. This was terrible. This was going to create price wars for hiring bloggers. You’re just going to ruin this cool place. Kind of like when companies came onto the internet — it ruined it for the people who were already there.
We ended up doing it anyway, and now when you look back we’re considered blogging pioneers. It’s just funny. It’s never too late to jump into something and make a splash.
So we created this manifesto. People hated us. Later on we launched five, six, seven different sites, on our way to something like 80 or 100 when AOL bought us two years later.
I’ll tell you a cool thing. Nick Denton wrote a five-part list of reasons for why we would fail. One of his reasons, the only one he retracted out of the five, was that we were running it on our own software that I built. He was using Moveable Type, which was the gold standard, it was free. We were idiots to write our own software. And then later on he regretted not creating his own software, and that was the only one that he took back.
Of the other four reasons, one was that we had really crappy subdomains, and not consumer friendly names, which we learned we needed to do. Autoblog. Engadget. Hackaday. One of the other five reasons was that Jason Calacanis is an asshole. And that kind of still sticks.
So you had 70 different blogs. How were you recruiting people to write for all these different sites?
Well after the dotcom crash, everyone loses their journalism job, and they all move back in with their parents, and they’re all hungry for work. So people were making their own sites and weren’t being paid to do it. So we made them an offer, and really the offer evolved over time.
Again, the first stab at this sucked. We were like, ‘hey, come work with us, and we’ll split the money with you.’ And then a $6 check comes in and we give you $3 and you hate us. That was what about.com did too. So later on we said screw it, we’ll pay you per post. So I think we started out paying $2.50 per post. Which is like, way below minimum wage, unless you realize you’re writing one to three paragraphs and putting a photo in it. You can do six of these an hour, so really you’re making $16 an hour. So eventually the bigger blogs started making money.
We dabbled with a lot of advertising networks. But the one that really stuck was Google’s Adsense. We worked with Google before they IPOed, and when they went to IPO, there was a document that contained case studies. I think there were two case studies about Adsense customers, and we were one of them, because we were on a track to make a million dollars a year off of Adsense. So Google used my company as an example of why people should buy their stock when they IPO, because they might be something big some day.
How quickly did the audience grow? Did you see a real fan base that was coming up around these blogs? Were these blogs developing a real brand and following?
We learned a lot of rules that don’t apply anymore. Some of the rules now apply to podcasting and other forms of content. One thing we realized was that exactly half the traffic went to the homepage, and half the traffic came into archived permalink pages through search engines. So people looking for some specific camera, or some specific car model. It was 50/50. It’s kind of the same with podcasts, where the latest episode gets 50 percent of the downloads, and then the archives get 50 percent. We learned a lot of rules like that.
Another rule we learned, and these don’t apply the same way today, was that if you do 10 posts a day on Engadget, on Autoblog, you get X amount of traffic. And if you do 20 posts a day, you will double your traffic. So we would just do more posts. When we’d cover CES, we’d do 60, 70 posts per day, and you just could not keep up with it. It was just too much, so we had to make a spinoff site.
The rules back then were completely different. People had RSS readers to read their content. Google Reader came along, destroyed that market, and then Google Reader was shut down. It was a completely different ball game.
There weren’t personality breakouts. There were certainly brand breakouts. And another thing we learned is that it’s really hard to have 60 different sites, and 60 teams, on 60 different topics, and have one or two of them be a runaway winner. So think of a network of radio stations that has Howard Stern and then a bunch of other nobodies. How do you balance that hit machine? Engadget, on some days, would see half of our traffic. So we had our bloggers — we’d be on a big mailing list — and there would be fights with the guy running the Photoshop blog, which was receiving like 11 hits a day. He’d be like ‘why aren’t you guys selling ads on my property?’ And we’re like ‘well, you don’t have an audience. Work harder and we’ll see what we can do.’ And then we’d have one person selling ads, so he’s going to sell ads for Engadget, for Autoblog.
Was it like herding cats to manage all these bloggers?
A thousand percent. I love running a virtual company. I’ve had teams of eight in seven different time zones. I like when the sun never sets on your empire. It’s so much easier today, with Slack, with video conferences. Back then it was really hard. We had AOL Instant Messenger, Yahoo Instant Messenger. These were pretty feeble products. We ran all these people through email.
Yes, there were hundreds of people working with us. But it wasn’t for that long. Mark Cuban invested in us, we ran his blog. By the time his money hit the bank, the advertising took off with Adsense, to where I don’t think we ever actually touched the money he put in the bank. And then 15 months later we handed him a check. We looked like geniuses.
There were hundreds of people working with us, and we got really talented at managing a large, distributed talent base, with also varying levels of talent.
Here’s a funny thing: when we sold the company, we said we’re going to give all the bloggers bonuses. And AOL said you can’t do that. And we said, ‘yes, we can, we’re going to write them checks.’ And they said, ‘no, legally, you can’t.’ So we sent all these checks, and the people who complained the most, when we looked at their counts, had only done like four blog posts. And the people who complained the least had done hundreds of blog posts. So it was kind of wild to see who complained the most, who worked the hardest. It was a giant personality stew.
How did the AOL deal come about? That was known at the time as being the biggest sale of a blog network.
We were the first of the three that they did. After us, they did Huffington Post and TechCrunch. Arianna actually wrote Jason when she started Huffington Post, and we had already sold our company. It’s wild to see what came later.
So Jason knows everybody. He knew Mark Cuban from being at his conferences, that’s how he got him as an investor. Here’s an interesting thing, we actually had talked to Jeff Bezos. We showed him what we were doing. We had a great meeting with him at Amazon. We went and toured a bunch of companies. We went to Yahoo, Google. We had all these great meetings in that year and a half of running Weblogs. For one of them we went up to Seattle, and they said, ‘Jeff’s not going to have time to meet with you, so it’s going to be one of his lieutenants.’ So we showed up and Jeff actually spent 45 minutes with us, grilling us about how we came up with domain names. ‘Where did you get the name Engadget? How about Autoblog?’ We had paid $400 for the Autoblog domain.
So Jason knew everybody. And at some point he was talking to a bunch of companies. We were actually talking about doing an investment round. We were going to do an A round, and we were talking to Jeff Bezos, Marc Andreessen, and Mark Cuban. Those were going to be our investors. And around the same time, a bunch of people said ‘what if we acquired you?’ And so we ended up at AOL. Jim Bankoff was really excited about what we were doing, and if you look at what he’s doing today, with Vox, it’s our playbook. A bunch of vertical sites with your own platform that you built yourself. It’s our playbook, but with two or three extra zeros on the end. He’s taken it to a whole new level.
So we fell into this really cool spot where the right people liked what we were doing and brought us in quickly.
And they just made you an offer.
Yeah, so we got an offer from them. It’s never that you just make an offer and you get a check. We had an offer and it fell through. We got an offer from Fox. We got a new offer from AOL. It was better than the Fox one, and we ended up with AOL. It was a little bit of a messy road, but it was six months of messy road. Can’t complain.
But they were just buying the blog network itself. They weren’t buying the technology behind it?
Correct. Fox had actually offered less money for the entire company, the software, the blogs, everything. AOL offered more money for just the publications, the blogs, and the team that knew how to take a new topic and rock out a site. Design it, stand it up, get a team for it, get advertisers, and go. AOL really liked that model.
They didn’t really think they needed the software. Weird thing. A year later they bought the software for a bunch of millions of dollars. And in the middle, the thing that really convinced them was that they launched a site called TMZ. I like to say that TMZ launched on my software, but it technically didn’t. It actually launched on the same publishing platform that AOL used for AOL.com. It was a site called Big Bowl, and that site — imagine this, you’re Harvey Levin, you’re breaking news about some celebrity thing. Everyone else is trying to get this news. You have a small window to get this out the door, to really get the scoop on this. And you go to your AOL publishing system, and it has to go through legal review, and four hours later, your story’s out on the homepage. And everyone in the world has scooped you.
He was going out of his mind using AOL’s publishing software, hated it, and said ‘why can’t we use what the Engadget and Autoblog people have? They hit save and the story’s immediately on the homepage?’ And so AOL didn’t say ‘well we don’t own that software,’ they said ‘sure, Harvey, we’ll give you that.’ So they worked with us. We helped them relaunch TMZ, we helped them get out of obscurity, and then put them on our platform.
Our platform actually published too quickly. They would come to me and complain. I think they published a story about Larry King getting divorced. And it said ‘Larry King is divorcing his seventh wife.’ And it was actually his eighth wife, so they went back to correct it, but Google had already indexed it and told the world that it was his seventh wife, and they couldn’t get Google to change. The site was so fast, and worked so well, and was so SEO optimized, that it was already out there. It was a really funny thing.
About a year to the day after we sold them the blog company, we sold them the blog software, and they still use it.
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When Engadget and Autoblog relaunched under AOL, did they go under AOL’s platform, or was AOL just licensing your software?
They licensed ours. There was no way on earth that they were going to run these things on their own software. These were the dark ages of the internet. There was no way we’d move our stuff onto their publishing platform unless we just wanted to kill all the speed, everything that was cool and nimble about us. So they left us on our own software. They were cool about that.
There’s that Paypal Mafia that everyone talks about? I love the AOL Mafia. Ted Leonsis. Jim Bankoff. We worked with Tina Sharkey. She’s a machine, raising hundreds of millions of dollars for Brandless. We met some really cool people who went on to do some cool stuff. And they left us alone. They had a lot of businesses that they brought in and killed. There was that joke, that AOL was where brands went to die. Netscape doesn’t exist anymore. They paid $4 billion for that. So many things went there to die. They did a really good job of leaving us alone, letting us do our own thing, and not messing with us too much.
You and Jason were still overseeing the blog network at AOL?
Yeah, we did a lot of things. We took over the Netscape site when we were there, turned it into a Digg clone, where you could vote up stories. We did a lot of other projects there. But we continued to run the blog network and our sites. We actually fought with them. If you think about it, my favorite story, is that one of the people who worked in legal, Lauren Fisher, who now works with Jim Bankoff at Vox, she was the only person I got into a shouting match with there. I ended up loving everybody afterwards, but Jason was only there for a year, and I was only there for a year and a half. We did a lot in that short amount of time. But ancient history.
What was your perception of AOL as it was trying to pivot to being this digital media company?
I look at people like Marissa Mayer going into Yahoo to try to rescue it. Or when my friend Mike Jones went to Myspace and tried to rescue that, what was the largest site on the planet at one point. And trying to fix that, I kind of joke, is like standing in the middle of a baseball field with a glove trying to catch a falling airplane. You’re probably going to not be able to do it.
AOL was the same thing. They had so much momentum as a large company. But they’d ask us, when we’d go to launch things, ‘where’s your PRD?’ And I’d say ‘what’s that?’ And I actually still don’t know what it stands for, but it’s a 900-page document that talks about the thing you’re going to build. And I’d say, ‘well, in the time it would take to write the PRD, we could just build the software and ship it.’ And they were like, ‘no, you can’t do that.’ And we were like, ‘well, we just did. While we were talking we just shipped new software.’ They hated us.
We would get our team together for code jams. We’d fly to a city, we’d do all this stuff. I think at one point I had $75,000 in unpaid expenses, because we were still running our company like a startup, and I didn’t know how to use their expense reporting and reimbursement system. So it was a big culture clash.
Think of it this way: I used to be a Yankees fan, but I moved away and don’t care about the Yankees anymore. And the reason I don’t care is because those players I loved aren’t there anymore. So I don’t think of AOL at Verizon as the same AOL that acquired us.
So you left and you continued to build content management systems.
Sadly yes, it’s true. So I left and I thought, ‘oh my god, I have the best idea.’ It was not an idea that was unique to me. Peter Rojas and Ryan Block went off to build a site called GDGT. It was a product database. I had the exact same idea. Think Wordpress, but for commerce and shopping and structured data.
So I went off and built the new platform. That was fun. I thought we were building Weblogs, Inc 2. It would be a gadget blog, but with a product database. It would be a car blog, but with a product database. We did that. Our lead investors were Jon Miller and Ross Levinsohn, the two people who had offered to buy my company way back when. We did that, it was another CMS platform. Then we built The Daily, realized that selling to publishers wasn’t all that fun. There wasn’t as much money as we’d hoped there would be in it.
But weirdly enough, when AOL and Time Warner split up, TMZ became our first customer at that post-AOL company of mine. And they still run on that platform today.
What was your motivation for building CMSes? Like we have things now like Wordpress, Drupal, Moveable Type. It seems like we’re drowning in these large-scale CMSes. What’s the point of building these custom CMSes?
It’s less and less of a good argument these days, I’ll say that. I love Matt Mullenweg, I’m a fan of Wordpress. There are a lot of good products out there. The Vox product Chorus. Medium, which is such a beautiful CMS.
So there’s a lot of good stuff out there. There’s less and less of a reason to do it yourself. It really comes down to how tightly coupled do your need your publishing process and your platform to be with your team. If you’re doing some heavy intensive audio thing, there’s nothing out there for you, you have to build your own. If you’re just doing a blog, oh my god, go use any one of the blog platforms. So it doesn’t matter so much anymore. It did a long time ago.
What you just mentioned is the reason I don’t do it anymore. It’s not that much fun. When we were doing Crowd Fusion, the post-AOL company, we built The Daily, we moved TMZ onto our platform. We worked with Best Buy on our product database site. We also had Myspace Topics, which was hundreds of thousands of topics pages, and aggregation, and all these cool cutting edge stuff. The problem was, after you get those four customers, when you go down the Comscore list, after TMZ, the next three things in entertainment and gossip don’t have their budget. They can’t afford you. So whatever you charge number one, number two and number three are kind of struggling and might go out of business.
So there just wasn’t a lot of money in publishing, and publishing platforms didn’t make any sense. I got out of it.
And you were still working with Jason Calacanis, right? He has this podcast, This Week in Startups. Obviously he has a reputation of being this manic guy who isn’t easy to work with. I remember reading about skirmishes that happened between him and Michael Arrington back in the day. What was going on with you and him all this time?
After he left AOL he started Mahalo and raised a bunch of money for that, and invited me to come. Not to be 50/50 partners like we were before, but to be CTO with a couple percent equity. I said no. Not because of the offer, so much as — he’s intense, and he’s a lot. I took like an eight-year break from Jason.
Around eight years after this stuff, he was in LA, I was in LA, and he said I’m thinking about doing a podcast, do you want to come be my first guest? And that was This Week in Startups. And I was his first guest. It feels like a million years ago now. He’s on something like 900 episodes now. So it’s become a big thing.
I slowly went back into doing things with him. He’s the biggest investor in the thing I’m doing now. I will guest host his incubator when he’s out of town. I co-host conferences with him. I helped him write his angel book. That was two days of working with him, and then I would need a break from him. I totally love him like a brother. When I complain about him, it’s like complaining about your brother. You’re allowed to love him. You’re allowed to hate him. But if anyone else hates him, you step in and help.
You ended up working on The Daily, which was the first high profile newspaper app that was going to be on the newly-launched iPad. Rupert Murdoch went all in on it. Spent millions of dollars on it. But it crashed and burned and represented — the entire media industry thought the iPad was going to save it, but it didn’t. How did you end up working on that project?
It was one of the coolest things I’ve ever worked on, but weirdly no longer exists and I can’t show you it. I can link you to the Super Bowl commercial they had, but otherwise it’s just gone, vanished.
It was a really weird thing. I ended up working on it because John Miller was working with Rupert Murdoch, and he was like, ‘hey, I need you to meet these two people that are working this new thing.’ They were definitely kicking around names for a few months. They were calling it The Daily Planet at one point, and eventually it just became The Daily.
So I met them for breakfast. They told me what they wanted to do. The iPad was a few months old at this point. I think it launched in April of 2010, and this was in June we’re having breakfast. And somewhere that summer they decided they really needed to build this thing. So we had like four months to build a publishing system. I brought in some teams that could build apps.
We had four months to build it, and we did it out of the executive boardroom in the second floor of News Corp, which no one else was able to go to. The food was off the charts. This is a bunch of unshowered developers working around the clock on something, but then when they stop to eat something, it’s filet mignon. There were paintings on the wall that were worth tens of millions of dollars.
It was a cool experience. I learned a lot. I never met Steve Jobs, but my team did go out there and worked there. If you think about this, it was like a joint venture between Steve Jobs and Rupert Murdoch. So Rupert Murdoch wakes up one day, and he’s like, ‘I have this vision. An iPad newspaper. Swipeable like the interactive Harry Potter magical experience.’ And so Steve Jobs had a hand in it. He did design reviews for it.
Apple thought the News Corp designers, which was the app team I brought in, wasn’t going to do a good job, so they were mocking up their own versions of the app, so they were going to design it. And then my friends’ app team was also designing it. Steve Jobs did a design review, and he said, ‘wow, I like the other team’s stuff better than ours.’ Later on, they built Apple News. They wanted to do that, they wanted a news app that came pre-installed on the iPad. So they ended up doing it later.
But we had a time window to get this thing launched in four months, which was insane. And it was moved a bit because Steve got sick again. He wasn’t at the launch. But we got to interact a lot with Apple through this. They had never done recurring iTunes billing. At that point, in iTunes you could buy a single song, that was it. They’d never done something where you could subscribe to something per week, or per year. They were building that, and we got to help them get that across the finish line. And so The Daily was the first product that had recurring subscriptions for it.
Why do you think The Daily and all these other shiny magazine apps failed on the iPad? I remember when every single Conde Nast magazine was sending out press releases about how they had a new iPad app out. There were all these trend pieces about how the iPad was going to put the toothpaste back in the tube. People were going to start paying for content again. You’d have these really glossy, beautiful ads that were like magazine ads. What was your perception of why all that went to shit?
They were really trying to put the genie back in the bottle. That was the whole idea. Paid content is back, baby. We’ve got the iPad. And it didn’t work.
I could go through a dozen different things, but the two big reasons of why The Daily failed had nothing to do with why people thought it failed — that it was bloated or that there was something wrong with the software. The problem was that it didn’t have a relationship with its subscribers. And then the other part had to do with the fact that they split News Corp into two pieces. The Daily went to the side that Rupert Murdoch wasn’t excited about anymore, and it was a cost center. So they just shuttered it.
So they had 200,000 installs of the app. Of that, 100,000 people were subscribers. They had 100,000 people paying. That’s amazing. It was an 18-month product. And even then, on top of that, they collected 150,000 email addresses from those people. But they didn’t own the subscribers themselves. If you subscribed to this and then unsubscribed, Apple owned you. The Daily and News Corp didn’t. They had your email address, but they didn’t know which email address matched the person who just unsubscribed. They didn’t have any of the billing, credit cards, anything like that. So they couldn’t write you and say, ‘hey, Simon, how can we win you back?’ They just couldn’t do that.
It was a thing that Jason complained about when he had Mahalo, and with YouTube, you could have a million subscribers, but you can’t talk to them, except in the YouTube comments. YouTube owns your subscribers. iTunes owns subscribers. Facebook owns your followers. So it was really a bastard gatekeeper that killed The Daily.
I remember asking myself at the time why he decided to launch a brand new newspaper. He already had The Wall Street Journal, which already had brand equity that had been built over decades. Why didn’t he just try to launch that onto the iPad rather than trying to launch an entire newspaper from scratch?
I think he thought that if we do this right, we can pull The Wall Street Journal and all these other newspapers in. It was a different thing. I think they felt like they were creating a new kind of site, and I think they underestimated how being behind a hard paywall like that — it’s not even a paywall. It wasn’t on the web. You can’t find it. I can’t share it with you. It’s in an app.
I think there were permalinks, but you had to know the exact URL.
It’s funny. There was a guy who would go and take those and build a web index of each day’s Daily issue out on the web. And they were like ‘should we sue this guy? Should we shut this thing down?’
There was just other weird stuff that I don’t think they thought through. Let’s say you were doing Thursday’s crossword puzzle. They had a crossword puzzle app within The Daily. You’re working on that. You’re like 80 percent through, and you want to come back and finish it up. And let’s say you’re on the West Coast and it’s 9:05 p.m., but now it’s 12 o’clock on the East Coast, and that crossword puzzle vanishes, and there are no archives. You’re like ‘oh crap, I was 10 words away from solving that crossword puzzle, and now there’s a new puzzle.’
There was just weird stuff like that. It was an ephemeral, paywalled thing. They broke stories. I think they broke the story about the pink slime in McDonald’s hamburgers. They had videos of it. They had all this great stuff. But what happens when the TV news wants to talk about it? They show the video that the Huffington Post pulled out of The Daily. And then the Huffington Post gets credit.
I don’t think they understand how hard it was to get people into the app.
We’re in this age of the successful paywall now with The New York Times, Washington Post, Wall Street Journal. It seems like what they learned from it is that they need to own those relationships. They seem to be building those relationships on the open web, and yeah, they have apps that you can subscribe to. The Wall Street Journal has a very robust mobile app. But a lot of those relationships are built on the open web and then you can log in through the app, because they know if they sign up through Apple, not only does Apple take a cut, but it owns a lot of the relationship.
Yeah, Apple owns the entire relationship.
What are your thoughts on the current crop of news aggregation apps? Apple News. Flipboard. Do you think that’s the route to go? It needs to be an aggregation of lots of different sources? I know Apple just bought Texture, which is a subscription, Spotify-like magazine app. Do you think that’s a better iteration of what this should look like on an app experience?
Yes and no. Yes, it is undeniably a better iteration. The software today, the experience today, all these things today are so much better. Nobody’s cracked it though. You’re different than most people. You’ll use a Flipboard. You’ll use some feed reader type thing. You’ll listen to podcasts. You have these consumption habits that are by journalists, for journalists.
But ask anybody else on the planet if they’ve heard of Flipboard or Apple News. I don’t think people who use Apple News even know they’re using Apple News. Just like Google’s AMP. They just don’t think about it. I click on Apple News stuff all the time. I don’t think people think too much about where that is, and I don’t think they love those products, or those brands, like those brands would like them to.
I don’t know. I’ve been following developments with Apple News, and it is seeing really wide adoption, especially now that Facebook has shit the bed and people aren’t trusting it. Publishers are reporting traffic that’s going through the roof, especially now that Apple News is now on the Apple homepage.
I don’t know if they click on the app because they want to. I have the Apple News app on my phone. I’ll get alerts, and if Apple News is fast enough, they’ll beat the other push alerts that try to get me to click on the news that just happened. And so I’ll get into them, but I’m not doing it because I care about Apple News.
The traffic for this Apple News stuff is off the charts, but they make no money off of it.
Currently. That’s the question, if the revenue will catch up to it.
That’s the theme I’ve looked at for a long time, which is these content platforms, they need to get their superstars paid. I work on a video app right now, so I study things like Vine. I was at Vidcon a few years ago, right before Vine was shut down, and I said some things people were horrified by. I said Vine is basically dead, and the problem was that you had these big platforms that got superstars on them. How do you get superstars paid? And it’s tough. If you look at the number of places writing checks for people making content, it’s not that big. It’s Google with Adsense and Google with YouTube. Those are the places where you can go make content and get paid. Vine you can’t, boom. The superstars leave, you get shut down.
A lot of media companies now — you talk about Facebook dropping the ball on every front. They launch IGTV, and you see the publishers not even talking about it in terms of Facebook or Instagram — they talk about Mark Zuckerberg. ‘I’m not giving Mark Zuckerberg my content. He keeps coming and asking me for my content. He’s burned me before and he’ll burn me again.’ They don’t trust him because he doesn’t write them a check. You can take Dancing with the Stars and stick it on IGTV or stick it on YouTube. YouTube writes you a check. Mark Zuckerberg does not write you a check.
I’ve never understood that. YouTube pioneered that years ago — writing the check. When Facebook started getting really serious about video, everyone thought it was going to start paying creators. Facebook does write checks, like Facebook Watch does pay out. But it’s on a very case by case basis, whereas YouTube really scaled it to where as long as you met these minimum audience thresholds, then you could opt into its payment system. That way, it attracted not just mainstream media companies, but it built out its own YouTube stars. And Facebook has all this frustration that it doesn’t have homegrown stars. But you have to incentivize them to start creating content on your page in the first place. You can lure over the Voxs and the BuzzFeeds of the world by writing them big checks. But if you want to lure stars onto your platform organically, then you need to let people make money from the very beginning.
It’s not fair to say that YouTube and Google nailed this and get it right. They do the same tricky thing that Facebook does too, which is, ‘hey we’re going to launch this new thing and we’re going to pay BuzzFeed and Vox and all these talented people a bunch of money to be part of season one of this awesome thing.’ YouTube subsidized a lot of people on this pivot to video years ago before Facebook did it, and it fell through. But they’ve done a consistent job of scaling it out. If you do a show on YouTube, you’re getting a check.
I don’t know how much you’re following Medium, but they have this huge pool of venture capital money, and they’re doing this membership thing. They’re taking this big pool of money, and saying, ‘OK, put your stuff behind our paywall and we’ll pay using this Spotify system.’ That’s how they’re luring content creators so you can start getting paid from day one. And they are courting mainstream publishers like the New York Times and Bloomberg, and putting that behind their membership wall. But they’re also using this big pool of venture capital money — they’ve raised something like $130 million. And they’re using that as the bait to build those homegrown stars on there so they can start attracting more subscribers and have an even bigger pool of money. I’m definitely interested in watching what goes on there.
Take a musician you love and then they do some new album, and you’re like ‘oh man, why are they doing this thing? They’re doing a country album? They were so good at this other thing.’ That’s how I feel about Ev Williams. Big fan of Blogger. What a genius that team was. Big fan of Twitter. The Medium thing, it’s one of those things where I love the guy, but have no idea what he’s doing. I just don’t think it’s very clear that the changes they’re making are going to change that business or make it good.
I’ll tell you something I don’t like: I love Hunter Walk, the VC, but his Medium posts are paid. So when I click on one of his links, and I read his story, I’m like oh crap, one of my three articles is gone now. Now I’m not going to be able to read this other thing. And why should he get a check for $1,500 at the end of the month for stuff he used to write for free? He’s not Vox, he’s a VC. I think it’s just very weird how they’ve gone about it. I hope they can figure it out. I don’t know that they can. It’s a tricky thing.
I publish my stuff on Medium and I have my frustrations with the platform. It’s an interesting experiment. Can we make this a better part of the web? Can we publish high quality content? And can we do it 100 percent without ads? All my stuff I put on Medium is 100 percent free, I don’t do the membership stuff. But at the same time, now that they’re prioritizing the membership stuff, I’m having a hard time getting distribution of my own content. So that’s definitely frustrating. I poo pooed it when they first launched the membership platform, but if he can hit that 10 million subscriber threshold where he has 10 million subscribers paying $5 a month, then I think I can start taking it more seriously. He’s definitely bringing in big guns, luring top tier editors and paying writers what they would get paid at magazines. It’ll be interesting to watch.
You’ve moved on from CMSes. You’re working on this product called Clipisode. You’ve talked about how you didn’t just want to build another app that people need to download on their phone. What happens is you get a ton of downloads — this is what kind of happened with Casey Neistat when he launched an app called Beme. You get a ton of downloads, people play around with it, and then they abandon it. You had this really interesting innovation with your video app. What is the video app?
In a quick little nutshell, it’s a way to quickly make video shows with other people. And it used to be that if I wanted to be on a video show with you, I had to go download some stupid app. And that’s a huge obstacle, a huge thing to ask of me.
You’re Shakira, and you want to have some group video chat with some people, then everyone participating has to go download an app. So we actually just did this campaign, our first brand campaign. Nationwide had Brad Paisley and Peyton Manning, they do these commercials where they’re working on the Nationwide jingle. They’re great. Peyton Manning is driving Brad Paisley out of his mind, because he’s not a musician, he’s a football player who has terrible suggestions. They just drive each other nuts.
So they did a thing where Brad Paisley put out a tweet and a Facebook post and an Instagram story with one of our invitation links in it, and said send me your jingle ideas. If he said, now go download the Clipisode app, they would have gotten like four replies. One would be from my mom. That would suck. That would be a terrible experience. But because people could just click on a tweet, swipe up on an Instagram story, and reply through these links, these mobile web app type experiences, they got hundreds of replies and more video than a Lord of the Rings movie.
So the app works with the open web so you don’t have to download the app to record whatever you want. The only person who has to have that app downloaded is the person who’s moderating the discussion.
Correct. Just the host. We built an app where 99 percent of the people who experience the app don’t use the app.
How do you envision, once this app has wider adoption, how it’s going to be used?
I look at Periscope and Vine and look at ways that you have people who create superstar experiences — I’m really interested in the parts of Periscope I love, and trying to make something that does the rest of it differently. I could have a great experience with Rihanna on Periscope where she’s streaming live and I’m asking her questions, but what if I were on camera sometimes? What if it wasn’t live? What if I wanted my name on the screen? So we really take that experience, deconstruct it, take the parts we liked, change the parts we didn’t like.
I really want this to be the way that you have amazing experiences with people you love. That could be making video shows with your friends. That could be making podcast interviews back and forth. It’s really about collaborative, two-way video. There’s not a lot of collaborative media out there. And that’s because most people don’t want to download a whole bunch of apps to go collaborate.
How do you plan to make money?
That’s very easy. We have an easy time getting brands involves. We have an animation engine that runs on top of all the video. If you have a show, you can have brand logos running at the bottom of the screen. You can run things on top of video while people are actually doing things. So we think there are ways to not do interruptive pre-roll, mid-roll ads, where you can just have a challenge. I could do a pumpkin spice challenge for Starbucks where I ask my fans what is the craziest thing you can think of to make pumpkin flavored. And do a show about it. So far, brands think it’s interesting.
They’re worried about user generated content. If you do a hashtag on Twitter, it goes to hell. Four kinds of hate erupt. People can just be savage, really mean. So we protect them from that. You’re getting the replies, but you curate them. You can take out the psychos. So that solves that.
But the funniest thing is we’ll do a demo, and I explain this is how it works, and they go, ‘great, when we launch this and put it out there, how do we get people to download the app to reply?’ And I go ‘ you don’t. You just click on the link. You don’t leave those apps.’ And they say, ‘I know, I get that, but at some point someone is going to download and install it, right?’ You’re doing a magic trick, and they don’t believe that the magic trick actually works, even though they just saw it. It’s a funny thing.
Our business is getting brands to do branded things, to get them to realize there’s no easier way to source content from their fans around the planet on apps they already use. And so it’s a little bit of an education. But it’s funny how much of a magic trick experience it is.
And are you seeing any interactions outside of brands? Are you getting organic pickup?
It works when you have a big audience. It’s like the thousand true fans thing. There’s a soap opera star that DMed me, he has a Facebook group where he promotes nutrition products. He shared a link in there and got a bunch of replies. It definitely works. Think of it like a YouTube channel. Brands can do it. Regular people can do it. Superstars can do it.
It’s one of the reasons why I got out of the thing I was doing before this. It was in the recurring crowdfunding space, which is not something a Shakira or a Howard Stern would ever use. It was only more obscure people. It’s a product that scales up and down from individuals doing shows with their friends to big giant superstars doing shows with millions of fans.
It’s a call and response product. It’s a YouTube star who says, ‘hey, shoot a video of your idea of what I should do for my next episode,’ and they include a link, and all their fans have to do is click on that link, it opens up on their phone, turns on their camera, and they can just hit record, and then as soon as they stop recording, the video uploads to the cloud, and now that YouTube star can sort through all the different options of all the people who submitted video.
Correct. That’s one of our strengths that it’s not live. On Periscope, it’s live. We specifically set out to build a non-live product. A friend of mine has built a live version of this and just got acquired by Facebook. So we’re specifically not being live.
Think about it as an interview show. You can mention something to me, and the next time I jump in to talk to you, I may have actually watched some YouTube videos or read a book, so I’m more informed. It compresses time. So yes, call and response. Ask your fans for something. A challenge. They don’t have to record it live. It’s anti-live.
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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.
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