News Trends Tilt Toward Niche Sites

It was a rough week for the big guys on the Web. Yahoo unceremoniously dumped its chief executive, Carol Bartz, and AOL faced a mutiny from TechCrunch, the Silicon Valley news site it bought last year.

Apart from the specific business issues feeding those travails — sinking traffic and profits at both — they provided yet another lesson of the Internet age: as news surges on the Web, giant ocean liners like AOL and Yahoo are being outmaneuvered by the speedboats zipping around them, relatively small sites that have passionate audiences and sharply focused information.

AOL’s acquisition of TechCrunch last year for a reported $30 million was an acknowledgement that scale, once the grail of the Web, can be a disadvantage when it comes to attracting the kind of audiences advertisers want. Last year, Yahoo hired writers who had a made a name for themselves at smaller sites — including Mark Lisanti, Courtney Reimer and Will Leitch — for the same reasons. But it is difficult to successfully transplant insurgent energy into a vast conglomerate, because the big blog tends to consume or destroy whatever it is fed.

Like newspapers, portals like AOL and Yahoo are confronting the cold fact that there is less general interest in general interest news. Readers have peeled off into verticals of information — TMZ for gossip, Politico for politics and Deadspin for sports, and so on.

Part of the problem is the result of a fundamental shift in Web behavior. Media stalwarts erected a frame around the Web and organized, and sometimes produced, content. Now the frame around content is the Web browser itself, and consumers do their own programming and are more inclined to see news consumption as a kind of voting, selecting smaller brands that reflect their sensibilities.

Watching the throwdown between AOL, a behemoth with a market capitalization of over $1.5 billion, and TechCrunch, a six-year-old Silicon Valley news site started on a shoestring, it was hard to tell which was the more important brand. What works on the Web right now is an identity, one that sparks recognition and in the best case, passion among its employees and consumers. Even though AOL paid a lot of money for TechCrunch, it was clear last week that its audience and its writers believed it belonged to them.

AOL, as a way of buying what they could not grow, aggressively grabbed onto some of the shiniest names on the Web, including The Huffington Post, Engadget and TechCrunch. The jury is out on The Huffington Post, most of the staff of Engadget deserted and TechCrunch is in the middle of an uprising.

Many of the news sites that are now having success on the Web — Business Insider, Gawker and Mashable, to name a few — are built on sensibility, which is generally a product of a small group of like minds. Innovation usually requires the “two pizza rule” — a working group should be no larger than one that could be well fed by two pies — with the emphasis on lightweight hierarchy, rapid decisions and constant reiteration of those decisions as the market responds. When that kind of approach is suddenly plopped into a huge, heaving bureaucracy, everything that made the brand cool in the first place and the site a good place to work seems to evaporate.

There are exceptions. TMZ has thrived as a division of Time Warner, College Humor continues to crack wise as part of IAC/InterActiveCorp and CBS seems to have done well by CNET after acquiring it.

There are some parallels with the television world. Broadcast networks still have mass and reach, but cable has been surging in part because brands come to mean something identifiable and attractive. The name NBC communicates very little other than generic bigness, while right now, FX, HBO, AMC and Showtime each convey a cachet that the big networks lack.

Google might want to pay a bit of attention to this after buying Zagat, the restaurant ratings publisher, last week. While Zagat might fold nicely into its local listings, much of the brand’s value comes from citizen raters who share their opinions. Will they feel the same way when they see their work powering a great big local search engine?

Bigness might work in traditional publishing: Magazines have a heavy manufacturing component, so combining back office operations to achieve savings on production, printing and paper makes sense. But on the Web, no players band together to get a group rate on pixels, and advertisers are increasingly less interested in buying eyeballs by the ton than in focusing on very specific groups of consumers.

“What’s happened in the past decade is that the relative value of portals has diminished, and specialized companies have begun picking off parts of their businesses,” said Henry Blodget, a founder of Business Insider. But he added, “Yahoo is still a colossal site, with hundreds of millions of users and billions of dollars of revenue. We’d be stoked to have even a tiny fraction of that.”

Ah yes, you can’t live on cachet. Business Insider has become marginally profitable in a short amount of time, Politico has begun to make money and TMZ has a sturdy enough Web brand that it was able to successfully build a television show of the same name. But all of them are hemmed in by the tyranny of small numbers.

Gawker Media has come the closest to replicating the magazine publishing model on the Web, with a federation of sites including Gawker (gossip), Jezebel (a site for women) and Deadspin (sports) that each have their own sensibility and editor, but share a common content management system and administration.

Nick Denton, Gawker Media’s founder, doesn’t see his empire thriving within a bigger company. On the phone, Mr. Denton said that he had a hard time thinking about working for anyone and when “I try to imagine — say — a News Corp. merger with Gawker and plugging their assets into our systems, I can’t imagine it being successful. We’re just too different.”

Nate Silver, whose popular blog FiveThirtyEight is licensed by The New York Times, was approached by a number of big media companies. But he said that simply grabbing the most money on the table from some company that was acquiring sites willy-nilly was not a good way to find a home.

In an e-mail, he said that for a merger of unequals to work, there had to be buy-in from senior people, resources in the acquirer that could help the site, and, perhaps most important, a willingness to allow the voice that made the site a success to continue to flourish.

“There’s a bit of a Groucho Marx quality to it,” he said. “You shouldn’t want to belong to any media brand that seems desperate to have you as a member, even though they’ll probably offer the most cash.”

Jonathan Glick of Sulia, a site that filters and publishes real-time content, said that, apart from cashing out the owners and sentencing those that remain to more meetings, getting acquired fails to meet a fundamental need. “On the Web, traffic, good traffic, is earned in terms of referrals,” he said. “You don’t need to be part of a big site because if you are doing it right on the Web, distribution finds you.”