Brown’s Web Woes

The Daily Beast’s execs are stars of the magazine world, but do they know what they’re doing online?

The site, which merged with Newsweek last November, continues to ignite buzz with high-profile hires, most recently The New Yorker’s Peter Boyer and The Village Voice’s Wayne Barrett. But to have a stable of well-known (and well-compensated) writers, a site must have a revenue model to match. That has yet to happen.

Two problems face The Daily Beast. One, of course, is it needs an audience and, so far, doesn’t have much of one. According to comScore, it drew 2.9 million visitors in December 2010; that same month a year earlier it drew 2.8 million. (Page views grew slightly from 34 million to 40 million.) Meanwhile, Newsweek’s audience has shrunk and a traffic deal with MSNBC has been scrapped, which will take away as much as 50 percent of its traffic, based on figures from Experian Hitwise. That would leave the combined sites with an audience of about 5.2 million—a pittance in Web audience terms.

The Beast tries to spin this by playing the influencers game. The site’s audience, explained Jeff Barish, associate publisher, consists of “people setting the agenda for where we’re going.” He cited internal research showing 56 percent have spoken at an industry conference. (How many of those 1.45 million Beast readers who supposedly spoke at these confabs ever found an audience is unknown.)

And is that enough when those same people are available in plenty of other places? Take Gawker Media. Its stable of sites outdraws even the combined NewsBeast by a factor of nearly four. The Huffington Post draws 24 million visitors.

The second problem the Beast faces is more fundamental. From the beginning, the site has tried to do business in a different way—and no wonder, since independent news Web sites have traditionally been unprofitable. But the Beast made the curious decision to divorce itself from the online ad system. It offers no standard ad units and sells only premium custom placements. Last week, it ran a Lexus ad interspersed in the slide show that forms a central part of its main page. Overall it ran 74 campaigns last year, according to Barish. But agencies aren’t crazy about making custom creative, particularly for an audience that comprises only a tiny sliver of the Internet.

“It will be challenging to manage that on a consistent basis,” said Joe Mele, vp of media and marketing at Razorfish. “It’s hard to scale. It’s a challenging way to go about it.”

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