If newspapers were run like CDBaby.com

Image: NS Newspapers on Flickr

Entrepreneurial journalists – if we call them that for now – are rare, despite the opportunities out there. 

When you do find people who are brave enough to start their own news business, many choose to replicate an existing news business model. People who launch an online magazine or website do it just like a newspaper would, right down to the use of terms like ‘editor’ and ‘reporter’, banner ads, the use of TV-style video and even a newspaper layout on the page.

Which is funny because the newspaper model is a failed business model: it just doesn’t work in the 21st century. Even the newspapers know it: their only chance of survival is to change themselves.

Instead: starters, entrepreneurs – whatever you want to to call them – should look at the business models that do work, and apply them to news.

The Guardian famously looses £100,000 every day: what idiot would copy a business model like that?

CDBaby is a well known music retail website, that was both Amazon.com and PayPal before either of them were invented. It was set up by a musician called Derek Sivers, for just $500 in 1998. In 2008, he sold it for $22 million.

Derek’s just published a great book which I encourage any wannabe entrepreneurial journalists to read. It’s called Anything You Want* and it’s the latest release under the innovative Domino Project (which I’ve written about before).  Anything You Want is full of stories of Derek’s process of creating CDBaby and lessons for the entrepreneur: it shows up why you can’t just assume the ‘conventional’ business model will work for you.

And it got me thinking: what if Derek Sivers was a journalist and not a musician? How would his ‘newsbaby’ website look? Here’s how I would run a news business like CDBaby.com.

.01 it would start by helping people

Derek’s founding idea is that creating a business is about creating a “perfect world” for you and your customers, where “you control all the laws”. It starts, he says, with helping people. For him, he was helping musician friends find a new platform to sell their music, and later on, it became a place where music fans could easily find music by independent artists.

Too often, I think journalists forget how and why journalism helps people. Why does it make the world a better place? What perfect world is it creating? This too, takes us to niches, small but passionate audiences, and creating valuable content that makes their lives easier, better, or more informed. It’s not about creating a website for you to show off your video editing skillz.

.02 it would start cheap and wouldn’t get investors

Derek started CDBaby.com for $500 in his spare time. He didn’t get an office for several years and he refused any investment money. Taking investment means you have to please your shareholders, he says, instead of you and your customers. The company grew, organically, with the money it was earning and not through debt or investment.

Online magazines – are virtually free to set up. As I have said many times before, a website, a Youtube/Vimeo account, a blog – they’re all yours for tens of dollars. The equipment is pricey, depending on what you want to do, but not nearly as expensive as it was 10 years ago. You can become an online film maker now for less than $500.

.03 it would proudly exclude people

I’ve heard this advice before, and it makes a lot of sense. Know who your customers/readers/clients are and know who they are not. Online publishing, unlike its mainstream counterpart, is about niche verticals – the smaller the better, in some respects. This way you know who to please and can focus on just helping them. The New York Times can’t do this: it has to write for every American. The BBC has to cover news stories that don’t alienate the average viewer, but also don’t put off the super-smart. This means compromise, and a weaker product.

Instead, I would start a website that aims to help just one group of people, and screw the rest. You can’t please everyone, so why even try?

.04 it would be constantly changing and improving

A news product based on a web model would always be in iteration, always being tested, always being adapted. Derek changed CDBaby as it went along: it started as just a place to sell his own CDs, and soon was a marketplace for thousands of them. He had to change his ideas many times, but always kept the early goal of helping his customers at the core. He tried new ideas often, but scrapped them when they didn’t work, no harm done.

The mainstream media, of course, does the opposite, putting new emphasis on the phrase ‘flogging a dead horse’. Newspapers have had more than a decade to adapt to the internet, but still push their print product like it was 1999. I know big companies steer like oil tankers, but a newspaper run like CDBaby.com would have redesigned itself years ago.

.05 it wouldn’t carry any advertising 

Here’s an interesting one: a news website run like CDBaby.com wouldn’t carry any advertising. I say this, because CDBaby never had advertising on it, while Sivers was running it. It comes down to the “perfect world” reason behind starting your company. In a perfect world, says Sivers, would your customers want to be hassled by pop-ups and flashy banner ads while reading a story? In an ideal world would they want to suffer pre-roll ads on video?

No. So stay true to your perfect world ideal, don’t use them.

How does a news business make money without adverts you ask? Well there are plenty of revenue streams out there: products, events, sponsorships, partnerships, licencing and bespoke creation to name a few: almost all of them less susceptible to economic downturns than advertising.

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.06 it wouldn’t be bogged down by formalities

Once CDBaby really started to take off, Derek says he was regularly approached by investors, and by people trying to sell all the legal guff we assume is necessary to running a business. Things like ‘terms and conditions’ and ‘privacy policy’ pages, employee review plans and even sensitivity training. He turned them all down, instead hiring and firing people himself, working out of his apartment, until he had enough to invest in a warehouse, and not even bothering with terms and conditions.

There are so many pointless things that conventional wisdom, and greedy lawyers, will tell us our business needs. But Derek says he never forgets there are “…thousands of businesses like Jim’s Fish Bait Shop in a shack on a beach somewhere, that are doing just fine without corporate formalities.”

.07 as much would be done in house as possible

Finally, a CDBaby news business would be an unashamedly small one. Although it eventually grew to have hundreds of employees, Derek did a lot of the core work himself. In order to make the website work when he first launched, it needed coding from scratch (this was before WordPress, heaven forbid!) Instead of outsourcing it, Derek bought a book about PHP and taught himself.

I’ve also heard good advice that one should know what you’re good at, and delegate the rest, rather than trying to control everything. But there’s certainly no harm in trying to learn new skills and keep the costs and company small. I believe there’s nothing you can’t learn – and there’s certainly no excuse for technophobia these days.

So there you go, a news business that is small, nimble, free from adverts, legal jargon, overheads, shareholders and debt, focused on making its audience’s lives better. Does it sound all pie-in-the-sky? I’d agree with you, if there wasn’t the CDBaby story to prove you wrong. 

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