Taking the shine off: Why blog publishing 'failed' in the UK (or at least didn't create a $30m exit)

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US entrepreneurs have had notable success with Blog publishing startups, in particular Jason Calacanis (Weblogs Inc sold to AOL for $25m) and more recently Rafat Ali (Paid Content sold to The Guardian for $30m). Ashley Norris, former co-founder of early UK blog network Shiny Media, left the company last week to create another startup – but there is no multi-million sale yet in sight for Shiny. In this guest post for TechCrunch UK he makes his first public statements on the matter, he rails against the BBC, VCs, ad agencies and pores over why he thinks Blog publishing has had only limited success in the UK. Did Shiny ‘cut the mustard’ or were wider factors at work? You decide.

The last five years have seen an explosion in the number of independent commercial blogs, blog networks and websites in the US. The Huffington Post, Sugar Publishing, Perez Hilton, Gawker Media, Engadget - the list goes on forever, and they are just the Web 2.0 premiership. There are thousands of individuals running less high profile blogs and websites who are making a significant living from their work.

In the UK it is a depressingly different story. I have spent the last five years of my life developing Shiny Media, the largest and most successful UK blog network. When I left the company at the end of August it could boast that over four million people each month were either reading or viewing its content. Shiny Media is however one of a handful of independent UK content companies to attract more than a couple of million monthly readers to its sites. There are some amazing blogs and sites out there, Hecklerspray, Anorak, The Spoiler, Coolest Gadgets, Unreality TV and Pocket-Lint spring to mind, but of those only one can claim more than a million monthly readers.

There have been several attempts to develop a UK based blog network (Mink Media, Blog Nation and Messy Media are the most high profile) but many have crashed just months after their launch.

When I first started seeking investment for Shiny back in 2005 I was constantly told I was wasting my time and that the business would never be worth more than a couple of hundred thousand pounds. Ok, so content was rather unfashionable with VCs back then, and what they told me only served to strengthen my resolve to make Shiny successful, but in retrospect I do think that many of the VCs had quite an accurate take on the difficulties facing any developing independent media companies in the UK.

So three years and lot of water under the bridge later here is my take on why I think the US explosion of new media companies hasn’t been repeated over here.

1 Limited number of UK online eyeballs – The obvious reason why UK new media companies haven’t achieved the same success as their US counterparts is down to economies of scale. US sites have at least five times more readers to aim at and that counts for an awful lot when most online advertising is still based around a CPM model (advertisers pay a between 50p-£20 depending on the campaign per thousand people who see their ad). What makes it even trickier is that most UK advertisers for obvious reasons only want their ads to be seen by UK readers. For most UK blogs and established websites Britons count for between 30-50% of their readership, the rest is from the US and other English language speaking countries. It is possible to monetise non-UK ad inventory but it is generally at much lower rates than the UK inventory. The difficulty for most UK blogs and websites is that they simply don’t have enough UK readers to interest ad agencies and brands, so they are left to monetise even their UK traffic using ads that have very low CPMs.

Perhaps an obvious tactic is to forget about the UK completely. Maybe there is something in the fact that two of the five best read blogs to emanate from the UK – Mashable and Coolest Gadgets – are focussed on a worldwide (in the main, US) audience.

2 Lack of imagination in the ad industry – Shiny has been very successful at attracting blue chip brand advertising (Marks and Spencer, Nokia, Dyson, BMW are among the high profile brands who have advertised on its sites). However it has been a long and slow process convincing agencies and brands to advertise on blogs. In reality it should be simple. The readers of the bigger British blogs (if Shiny and other groups like Glam are to be believed) tend to be young, affluent, educated and spend much more time online than they do imbibing other media. However many brands and their agency planers have chosen to play it safe and will work with established media brands or mega portals like MSN, even when the ads themselves will be seen by a less focussed and often an inappropriate audience. There are signs that this is changing, but the lack of brand advertising on sites like Hecklerspray and Unreality TV really is baffling.

3 Lack of UK media entrepreneurs – As someone who wasn’t involved in a start up in the first web boom largely because I spent all my working hours writing about it for magazines and newspapers, I can understand why there are so few media entrepreneurs in the UK. Many of the smarter journalists are way too busy to develop their own start up and there are very few entrepreneurs outside the media who have the capacity to develop media properties. Ironically many of the most successful, blogs and websites in the UK have been developed by freelance journalists who have worked on their sites in addition to writing for others, and in many instances rival media. This is ideal for slowly building an audience, but the emphasis is on the word slowly.

4 Lack of VC support – As a rule European VCs don’t tend to be too interested in media unless it is supported by a technological innovation. Other than Shiny I can’t think of a single online editorially based media play in the UK that has attracted any sizable investment in the last few years. Before Shiny it was Magicalia Publishing and that was many years ago.

Conversely organisations like Next New Networks , the closest US equivalent of Shiny, has several VCs on its board and has so far attracted over $23m in funding. Established US media has also worked with independent new media companies too. NBC has equity in Sugar Publishing, another Shiny rival, while The Discovery Channel acquired Treehugger the leading green blog.

5 Too much competition – Several commentators have suggested that the explosion in successful blogs occurred largely because Americans distrust established media and see it as being in the pockets of big business. I can’t really comment on the US, but I do know that this isn’t the case in the UK. On the surface Britons appear to be fairly loyal to their newspaper and magazine brands. There have been many examples of offline brands that have been a disaster when launched online, but there are some significant successes now too. Existing media companies have much larger budgets than independents and are now starting a serious land grab in building up their online properties. Just check how often you see a UK media company using a Google Adword. However the independents have in many instances a first mover advantage and often a keener understanding of how to work the web to market a site which has kept them one step ahead of big brands.

6 The omnipotent BBC – At the risk of sounding like a stuck record the existence of the BBC and its hugely impressive range of online services does make life even more tricky for the independents. Going back to point one there is only a certain number of UK web surfers and as the BBC hoovers up a large percentage of them the slice of the cake for the independents is even smaller. Secondly, the BBC’s reluctance to link to British blogs and smaller independent media organisations, while at the same time endlessly plugging established media groups (Five Live is one long plug for mainstream media brands) makes life even more difficult.

On a very basic level, if the BBC didn’t have its huge online football offering, then it is very likely that Shiny’s footy blog, whoateallthepies.tv, which is one of the most read football blogs in the world, would be significantly larger. What is even more galling for the founders of Shiny and other indie media groups is that they personally pay a small amount in the guise of the licence fee to fund what in reality are rival sites.

Were the BBC to take a more enlightened view of British independent and social media it could do a lot to encourage young talent to develop UK media properties thereby greatly enriching British media.

Conclusion

On the surface this probably reads like a fairly negative post. It isn’t meant to be.

I do think that British independent new media companies can develop businesses, Shiny is proof of that as are Trusted Reviews, The Register and Digital Spy, but they have to be so much smarter and work so much harder than their rivals in mainstream media. I think online video will provide an opportunity for UK companies to compete on a worldwide stage, however they will need access to fairly sizable funds to do this.

Finally it is worth adding that the economic downturn might actually provide some interesting opportunities for UK bloggers. Several of the most successful indie websites date from around 2002/2003, a time when mainstream media was pulling out of the web after the dot com crash. It is possible that 2009 will go down as the year in which the third wave of indie media started gaining momentum. Here’s hoping.

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