News Lens grew a millennial audience: now it’s harnessing the data
The Internet rewards scale. Digital start-ups in middle size societies need to think smart, meshing local strengths and global thinking — like Taiwan’s News Lens.
By Christopher Warren
News Lens has a large goal for 2020: “The story we want to create by the end of the year is: we will be seen as one of the largest digital content and service groups in greater China,” says co-founder Joey Chung.
The Taiwan-based news site has built itself into the island’s leading independent digital news site over six years by carving out its own lane — in its approach to journalism, in its engagement with off-shore venture capital and in its expansion strategy through greater China. Now, it’s pivoting to diversify its revenues — and strengthen its journalism — through the data its successful news site has produced.
Because it is one of the most popular sites in Taiwan — not far behind market leader Facebook — News Lens is now building transaction and advertising businesses that trade off the behavioural and demographic data it gains directly from its users.
As co-founder Joey Chung says: you can worry about the loss of (third party) cookies or you can innovate off the change.
“We own this as first party data,” says Chung. “This is from direct first party users which allows us to create a less risky complete data set. For 2020 a key point is: how do we find business models that, as a first step may need 14 million readers? We are able to offer this sort of platform at scale.”
Because of the brand’s rare positioning as a neutral journalistic reporter, Chung says, they offer users no political risk. They deliver a broad — although largely millennial — audience with issues targeted at Taiwan, Hong Kong and south-east Asia, plus an English-language international edition.
Scale matters more in mid-size markets
News Lens is now building out their offering either internally or through mergers or through a mix. For example,last September they bought a market research company: “They need data scale, a funnel. We are able to offer that funnel,” Chung says. This month they are finalising a deal for one of Taiwan’s largest mobile ad-tech service companies. (“80 per cent of our traffic is mobile,” says Chung.)
The company hopes to use this shift to shake up its revenue mix. Currently about 80 per cent comes from the news products. They aim for a 50–50 model, where half comes from the journalism and half from media/tech related services.
News Lens is not the only media company attempting to exploit its first party data. About 14 months ago, News Corp launched News HQ to consolidate the first party data it holds on about 140 million people in the US.
Independence is a strong brand position
Chung says the romantic reason for launching News Lens in late 2013 was that there was nothing in the journalistic middle in Taiwan. The news media, he says, is either sensationalist (the week they launched, the major story was a visiting Japanese p*rn star) or they are owned by huge conglomerates that are pro- or anti-China.
“There are six cable news stations and you know in advance how they’ll cover a story. With Occupy Central in Hong Kong, for example, it was one side or the other: they were either vandals or freedom fighters.”
Chung has a business background (his co-founder Mario Yang brings the journalism expertise). He was in the United States studying for his MBA at Harvard and then working for Japanese company Sanrio (owner of the Hello Kitty brand).
“I saw the first wave of new media emerge in the US and surpass the traditional (print) media and wondered why that hadn’t happened in Asia There were some niches, such as digital media for women,or for business. But we wanted to be mainstream concentrating on the younger generation, the digital natives. We wanted to be as calm, rational, objective as possible — we’re trying actively to be seen as fair.”
There’s no secret sauce to being balanced and rational, he says. “You’re very careful about who you hire. You explain to them the rules. At the end of each article we tell you who’s the senior editor, who’s the junior editor, who signed off on this. Every piece goes through three sets of eyes before it goes up.”
If it’s news, the question, he says, “is this something that the average reader needs to know? You need to be able to justify that”. If it’s opinion, he says, “the questions are: Is it rational? Is it logical? Is there a message that needs to be shared?”
“There used to be a lot of confusion of what we stood for,” he says. “We’re the only media organisation that at 11 will put up a piece supporting one position. An hour later we’ll publish a piece arguing the contrary. If we are never going to contradict ourselves, then we won’t be balanced.I think people understand that now.”
The right money from the right investors at the right price
Chung’s main role has been to get the business and money right, with the right investors to support the product and to power the company’s growth.
He quickly identified two drawbacks in local investors: either they were the same rich people who already own media or they undervalued the company, taking a traditional asset and revenues approach, rather than recognising the potential of digital. And, at the beginning they were too small to attract international investors.
As a result, the co-founders boot-strapped their project with enough cash to give themselves 18 months runway to build a proven product that would attract suitable investment.
“We were trying to get to the size of the local tv networks on-line [then about 300,000]. We hit 1.3 monthly uniques by the end of month three. Once we hit 1.3, the wheel turned a bit. Then some companies wanted to look at us. They could see something and we could start negotiations.”
Their next hurdle was valuation. Chung says he found that the problem with Asian venture capital is they take the traditional approach of estimating value on EBITDA or sales. “That greatly undervalues digital media in this region because you have limited revenue.”
Instead, he says, he learnt that in the first half of the life cycle, you have to find a proxy for sales. In US digital start-ups, that proxy is usually a multiple of user numbers — monthly unique visitors — which illustrate both scale and growth potential. Each subsequent VC round uses a higher multiple of (hopefully) increasing user numbers.
In about month six, North Base Media came looking for their first investment in greater China. They supported the initial seed and the subsequent A round of funding with their first outside investment in greater China.
“In each of our rounds, we deliberately go out to diversify our investors. Each round, I want one-third to be of the previous round, one-third to be institutions and one-third from strategic angels,” says Chung. His institutions now include Asian funds, although he avoids investors from China or Hong Kong that may raise questions over their political neutrality. His “strategic angels” include YouTube founder Steve Chen and Kevin Lin, founder of Twitch.
News Lens is now looking ahead to either a final D or a pre-IPO round. The ultimate goal is to go public, but timing depends on possible price.
News Lens approach to market consolidation
News Lens has grown through merger, dedicating its C-round raising to consolidation with greater China’s digital media start-ups.
The company identified that most of Taiwan’s digital start-ups had saturated their target market capped by the island’s population of about 23 million people. For example, one of their first mergers, Inside, dominated the market for tech and finance news, as the Tech Crunch of the island, but were butting up against the hard ceiling of population.
Similarly, News Lens absorbed a successful sports news outlet that covered sports of specific interest to the island.
News Lens was able to offer an exit strategy to a product that, in digital terms, was more matured. “The deal is usually done in a mix of cash and equity. We’re offering an exit to some of these smaller digital verticals. We provide some cash and then swap their equity at value for the long term,” Chung says.
The matured products bring cash flow. News Lens brings scale that protects the product in its market space.
Take-away
The News Lens experience reflects a truth about digital start-ups: to launch you need to identify the gap , in the market, in the product offering, and for digital news media, in the journalism itself. Success on the internet demands scale if you are to survive.
Not all markets offer the scale of, say, a United States or China or India. News Lens provides pointers on how to scale in a market capped by population and to use that scale to innovate to deliver a continuing viable product.
Christopher Warren is a writer, journalist and media commentator for Crikey Daily. This report was written for the February 2020 issue of The Story, a fortnightly newsletter on reinventing journalism in the Asia Pacific, published by Jacqui Park. You can sign up for the newsletter here: http://bit.ly/TheStory-AsiaPacific
