FOR PUBLICATION

To the Editor, Aardvark

Dear Bruce

It must be nice to 'tell it like it is', a luxury especially afforded to the Internet-based media such as Aardvark. Not.

The rest of us 'old media', if I believe your comment in this week's edition, have suspect commercial pressures that force us to settle for advertorial in order to attract the advertising needed to feed our voracious businesses.

Your quaint view of how the media works is commonly held.

It seems self-evident to some that if you print nice things about advertisers, they will want to invest large sums of money with your publication, and if you don't, they won't.

But that's not the way successful media operate, and incidentally is not the way most successful advertisers work. Advertisers buy influential readers and the influential readers don't buy into advertorial. That's Media 101.

Media 201 is that those media who do try to mislead their readers with shonky editorial never get to the advanced class. They just plain underestimate their audience which stops coming.

Readers (and viewers) have built-in antennae that spot the bullshit. A well-known global advertising researcher Starch has shown, for instance, that when an ad is placed next to a piece of related editorial, readership of both the ad and the editorial plummet. Successful publishers understand this even without the Starch research.

I don't dispute that there are media organisations that practise advertorial. Used openly, it's a legitimate media model in some markets. The rule here is just that'be open about it, don't try to deceive. Look at the huge infomercial industry for one successful example.

But the allegations contained in Bland's PC Magazine article, and alluded to in your story, are the stuff of conspiracy theorists driven by their own failures (see my letter to PC Magazine's editor, published on Aardvark).

Their most vocal proponents fall into two camps.

1. Disgruntled businesses who wonder why their competitors are getting good press when they are not ('they're obviously paying off the journalists'). I'd take a dollar for every time this allegation is made and I'd retire richer than Warren Buffet.
2. Frustrated media operators who wonder why they can't get the ads or the hot stories ('they're obviously paying off the other mag's journalists'). The real story is that the struggling media rival is simply not seen as important. And ironically, they're probably more tempted to compromise their editorial ethics through desperation. The market leader knows it can lose a few threatening advertisers (and they're out there) and still earn a living.

When I look at the costs associated with a typical print media organisation, two thirds or more is labour-related. The remaining third is mostly printing and distribution which, rather than being removed as costs in online publications, are simply switched to communications and technology-related costs.

But I agree these should be lower, leaving Internet publications with maybe a 15-20% cost advantage. Their cost structure will be closer to radio without the frequency license fee to pay off.

Of course, the revenues are lower too and in the long term all competitive markets have a way of reducing profit margins to a consistent narrow band.

So, if the majority of costs are labour-related, how can the Internet reduce these? In your case, with Aardvark and 7am, you've found a way through the dubious practice of constructing a publication almost entirely from links to other sites. Cleverly, they pay the labour costs.

And by the way, I understand all your arguments about your place in the food chain as a provider of eyeballs for others to sell.

So your sites can presently exist on almost zero income because other people are funding the cost of content development and distribution. And you can evidently afford the luxury of 'telling it like it is' by lowering your overheads at others' expense and not having to cosy up to advertisers. A cheap operator.

But cheap isn't free and you've still got to feed the family and pay the mortgage. I can imagine that a rumbling stomach or a pesky bank manager can create a more tempting environment for advertorial deals than most fat corporate media with their regular paycheques would be subjected to.

If I take your model to its extreme, it will kill much of the variety and free spirit it claims to be saviour of and lower the potential for investment in quality content on the Net. The sites that thrive will be either

1. tiny, low overhead operations that defray costs by generating little or no original content and attract readers by providing outspoken opinion (very quick to create, but valuable nonetheless when done well) and links to interesting stories that other media have paid for, or
2. the recipients of these links which, of course, must pay for their content through selling these freshly-delivered eyeballs to advertisers. This group will get fewer and bigger as they soak up increasing amounts of mind share and advertising revenue. And they'll employ more and more people to build the best content to keep ahead of the competitive game. If I'm to believe you (which I don't), they will also succumb more and more to advertorial as advertising revenue needs increase. I don't believe this scenario will happen and one of the things that will stop it is that, over time, increasing amounts of the best content will not be available free to link to. There'll be more user-pays.

I'm only against naive claims as to why one publishing model is inherently better or worse than others.

As you know, we already have one of the country's best and most visited Web publications @IDG (www.idg.co.nz) and we plan to be successful in both new media and 'old'.

Much of the reason for our success in both media is that the underlying success principle of quality content attracting a valuable audience doesn't seem to be any different in the new media or the old.

Nor is that audience's ability to sniff out and avoid the dishonest and the bad. Nor is the high cost of creating and distributing quality content and the publishing acumen needed to pay for it and make the equation work.

Maybe the more things change, the more they just stay the same ?

Martin's Letter to PC Magazine