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A variety of business models among the leading U.S. media

09 December 2013 / 22:12:52  GRReporter
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Ivan Petkov

In 1988, Clifford Stoll, who graduated in astronomy and whose vocation is computer science, wrote for the Washington Post an article that predicted the importance of the Internet and how the World Wide Web would change our lives. In the article, he used expressions that were not common in the everyday language of the time, such as "a computer virus" and "snail mail", unlike the emerging e-mail through which letters are received almost instantly. Stoll predicted that people would communicate, exchange information ... and recipes, and would even fall in love on the World Wide Web. However, along with that, computer viruses would be a threat that could break the trust "between neighbours."

Several years later, in 1995, Clifford Stoll would confidently write that "no online database will replace your newspaper." Today, 25 years after his first statement and 18 years after his second, we see that he was not right. Computer viruses, despite the fact that they are widely spread and in spite of the damage they cause, have failed to destroy trust and communication between people on the Internet, and online editions are about to replace newspapers. As regards the media, Clifford Stoll expressed opinions and attitudes that were disseminated at the time and that have led to the belated change in the newspaper business in the U.S. and to the painful implications for traditional media.

We know, however, that in society, like nature, there can be no empty space. The advent of new technologies has brought a new wave of media that exist on the Internet which are able to gain popularity and a large number of readers precisely through the web. Many of the most popular news websites in the U.S. are a continuation of the paper editions. Another part of them is the ownership of the big broadcasting companies. The majority of online media are a continuation of traditional media. There is also a new type of media, which began its existence  on the net. Let us look at the world of both large and world-renowned American online media and behind the curtains of those which we can say are outside the "mainstream". The latter category does not involve media that regular readers outside the U.S. would mention in the first place.

The Huffington Post

The Huffington Post, known as Huff Post or HuffPo, is emblematic. The media was created by Arianna Huffington, Kenneth Lerer, Andrew Breitbart and Jonah Peretti and based in New York. Originally, it was a news aggregator that had successfully incorporated elements of a blog and editorial content, covering a wide range of topics such as politics, business, entertainment, environment, technology, society, culture, health, local news and more. The media was launched on 9 May 2005 and was an alternative place to publish comments of liberal views. On 7 February 2011, the giant AOL acquired the online edition against $ 315 million; Arianna Huffington remained editor of The Huffington Post Media Group. In 2012, The Huffington Post became the first commercial digital media in history to receive the prestigious Pulitzer Prize for journalism. In the same year, many charts such as eBizMBA Rank, Alexa Global Traffic Rank, US Traffic Rank and the companies Compete and Quantcast ranked the media first, thus making it the most popular American media of the year.

So as not to create the impression that four people made a website, which they sold for $ 315 million, "something that can only happen in the U.S.", I will mention that the media had received significant amounts from investors when it was run by its founders. After the first year of its existence, in 2006, The Huffington Post announced that it had received an investment of $ 5 million from SoftBank Capital. This fact in itself is impressive as we are talking about a media that had been launched just one year earlier and that existed in a very competitive environment and among media with traditions. This investment allowed the media to hire more staff, update the content of the website around the clock, hire journalists to cover the events on the spot and include multimedia and video content on the website. Greycroft Partners invested in the online edition in the same year too.

Online video blogging was the essential content that the media was trying to impose. In November 2008, The Huffington Post managed to win the confidence of investors and received another $ 15 million, resulting in a new increase in the number of journalists and in the volume of local news from all states. The acquisition of the media by AOL has turned it into a member of a group involving the iconic publications owned by AOL, namely Engadget, TechChrunch, Moviefone.

The Wire

Equally interesting is the story of former The Atlantic Wire which, since November 2013, has been called The Wire. Unlike HuffPo, the story of Atlantic started back in 1857 with The Atlantic Monthly magazine published in Boston. The edition had quickly gained popularity throughout the country, making it possible to maintain it for over 150 years. In 2005, the company headquarters moved from Boston to Washington, where it joined its advertising and distribution divisions, thus saving $ 200-300 thousand, which it put into other ventures.

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