The Online Media Business Model: Rappler Shows Us How to Do It Wrong

For an entity that has spent a little over a year aggressively trying to convince the rest of us that it is some kind of “phenomenon,” just what, exactly, the creamsicle-themed “social news network” website Rappler is supposed to be is a question that’s still looking for an answer.

And recent speculation about Rappler’s ownership structure has now added a new wrinkle to the mystery. A rumor flying around – an unsubstantiated rumor of the sort that hangs in the alcohol vapor in which off-duty newsmen trade stories, but one that most agree fits the “where there’s smoke, there’s fire” condition – is that the attention is starting to make Rappler’s “anonymous shareholders” more than a little uncomfortable, uncomfortable enough, in fact, to seriously reassess whether their investment – reportedly around P10 million – may have been misspent.

Online media – where the term “media” still bears much of its original connotation – is a rough trade, and it’s not at all surprising that Rappler has failed to deliver the goods for its investors. “Traditional” media – and that includes personalities like Rappler’s chief cook and bottle washer Maria Ressa, who never tires of brandishing her journalistic credentials – is not necessarily dying, but it is being forced to evolve; an online presence is not merely a matter of covering another channel of communications, but is becoming a core source of revenue. The news division of the CBS network in the US, for instance, earns far more income from its online brands through CBS Interactive than it does from its conventional TV programming. It’s not easy – some media giants like the fabled New York Times are struggling mightily with the new reality – but success is possible, with a clear understanding of what role the media organization will be filling, and a sound business model to take advantage of it.

Those two elementary concepts – market position and an efficient model appropriate to that position – are what Ressa & Co. completely fail to understand. In an article last month, benign0 pointed out the folly of forcing structure and conventions on the Internet. The character and growth of the medium is organic and self-adjusting; there are definable roles and spaces in the online world, but they weren’t necessarily “created” – they evolved as a consequence of the flow of information and users’ interactions with and around it. As it is now, the online realm in the context of “news and journalism” can be roughly divided into three broad and overlapping areas:

• Authoritative media: Essentially, the “traditional” media in its online guise. The “authority,” manifested in the value as a primary source of information for the rest of the vast communication network the Internet represents, is to a large extent reputation-based; that reputation, however, is based on tangible attributes: better access to more information, and a better ability to deliver it on a large scale.
• The established “secondary” or “alternative” media: Not usually the first sources of news, but delivering the weight of authority in depth and insight applied to the news that already exists, and as a result, occupying definable perspective niches. A large-scale example would be the Huffington Post, which is an authoritative source for insight from a liberal perspective. A more localized example is our very own Get Real Post, which serves as an intellectual and philosophical auditor – a “fiscalizer”, if you prefer the stupid native term for it – of popular issue trends. Again, the authority and credibility is fundamentally based on the quality of content.
• The teeming millions: The vast spectrum of everyone else, from Twitter and Facebook trolls to active, widely-read bloggers. The few outstanding ones can and do move up into the other online media segments and gain influence, but most do not.

Online media can be a productive business at any of those levels, provided one understands that success at whatever level is entirely dependent on delivering the right product (quality, relevant content) to the right audience.

Rappler’s problem, however, is that it does not fit into any of those segments. Being a part of the teeming millions and simply working their way up by concentrating on the craft of writing is obviously unacceptable to personalities who have such high regard for their own resumés. Being a part of the credible alternative media – which was apparently the original concept – went out the window almost immediately when Rappler and its associated personalities became embroiled in scandals involving biased and inaccurate – if not actually fraudulent – reporting during the Corona impeachment trial, the publication of advertorials for certain telecom giants, and the recent tsimis involving the site’s ownership and certain individuals’ personal lives. And despite what Rappler’s “stars” think, their journalism credentials, while objectively respectable, are nowhere near noteworthy enough to provide the horsepower for Rappler to be regarded as high-level primary media. Anderson Cooper or Christiane Amanpour could probably ride “having worked at CNN” into a position of personal online supremacy (and Amanpour, in fact, actually went back to CNN after seeing her earning power take a dive as a freelancer); Maria Ressa evidently cannot.

So where does that leave Rappler? No problem, decides the plucky trio of Ressa, Marites “It’s not a real doctorate until I say it is” Vitug, and Glenda Gloria – we’ll just invent something new! So Rappler is presented as a social news network. What is a social news network? In their own words:

Welcome to Rappler, a social news network where stories inspire community engagement and digitally fuelled actions for social change. Rappler comes from the root words “rap” (to discuss) + “ripple” (to make waves). It’s a new world of limitless collaboration enabled by new technology and connected by social media.

We at Rappler promise uncompromised journalism that – hopefully – inspires smart conversations and ignites a thirst for change.

…Technology now allows us to work in ways never before possible to create connected communities and to tap “the wisdom of crowds,” the process of harnessing a group’s collective answer which, under the right conditions, have proven to be better than any single expert opinion.

In essence, a “social news network” is implied to be one in which “crowdsourcing” is used to generate, gather, and spread information, based on the vague notion that, “X number of people can’t be wrong.” So it is not a conventional media outlet operating in online space, or an alternative media outlet presenting authoritative insight and background on current issues based on research on expert contribution. If anything, it’s a forum, or a chatroom on steroids; a very well-designed and user-friendly chatroom, certainly (the hideous orange-and-white color palette notwithstanding), but not particularly novel.

On a side note: Ignite a thirst for change. Seriously?  In all your collective years of journalistic awesomeness, have none of you ever encountered the term “mixed metaphor?” It is in the AP Stylebook, you know.

There are two basic ways to approach a business model. The first is the product-oriented way: Here is our product, let’s find a market for it. The second is the market-oriented way: Here is the market, let’s create a product to meet its demand. Rappler instead has chosen a third path (to the extent that they actually gave it much thought it all): Let’s create a new product and market at the same time. Creating a new product is relatively easy, so is it possible to create an entirely new market segment? Theoretically, yes; in any market, the organization that introduces an innovative product or service can create demand for it, rather than tapping existing demand, if that product or service is significantly different from and superior to what is offered by the competition, and the market is educated that they do, in fact, have a need for it.

Rappler has not, however, created a new product, but rather one that looks suspiciously like innumerable others, and if anything is even less differentiated. Nor has Rappler created a new market segment; nothing about their offering is, in business terms, non-substitutable, therefore they have not created a demand.

If Rappler was simply a blog for Ressa & Friends to air their own opinions and sound off on the latest outrage fads – that is to say, if it was exactly like it is on their own dime, rather than the many, many dimes of investors – then there would be no point in criticizing them, other than on their content, which is usually not interesting enough to get fired up about anyway. But when there’s money involved, especially other people’s money, and especially when it’s counted in the millions, the basic trinity of product-delivery method-revenue stream must be accounted for. If it’s not, then the “mood meter” is going to turn to “sad” rather quickly. There’s plenty of room for vanity on the Internet – it just doesn’t pay very well, and even the most patient “financing angel” will figure that out sooner or later.

BenK

I write a column for The Manila Times on Tuesdays, Thursdays, and Saturdays. Most of the energy sector and the heads of several government agencies probably wish I didn’t.