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GigaOm And The Death Of Editorial

This article is more than 9 years old.

Remember the old joke about the farmer who won the lottery? A reporter asked him what he’d do now, and he responded he’d just keep on farming till the money was gone.

It seems that running a technology news organization is prone to the same fate, as GigaOm discovered this week. Just last year it received an infusion of $8 million from investors, but this week it ran out of money and abruptly shuttered its offices.

GigaOm offered more than tech editorial, however. It was also an industry research firm as well as an events company. By all accounts, both these lines of business were quite successful in their own right.

On the research side it offered subscription-based access to research from a pool of independent analysts. It also matched up paying software and hardware vendors with analysts to create white papers, webinars, and other commissioned content marketing pieces. (I served as an occasional GigaOm analyst, participating on a webinar and several paid briefings over the last few years).

By using a pool of independent analysts, GigaOm was able to assemble a remarkably strong research team without the overhead of putting them all on the payroll. Based upon conversations with other GigaOm analysts, it had been doing a brisk business in commissioned content marketing. I would find it hard to believe that this line of business was losing money.

Its events business also appeared to be going strong. Next week’s Structure Data Conference in New York City – apparently canceled – sported a healthy list of almost forty sponsors, paying as much as $85,000 each, according to GigaOm’s media kit. Furthermore, such events generally always been packed, suggesting a good level of profitability for this line of business.

What, then, finally did in GigaOm? My inquiries haven’t yielded an official answer, but if the research and events businesses were doing well, then only its editorial effort remains as the prime candidate for money loser of the bunch.

The Problem with Editorial

By all accounts, GigaOm’s tech reporting was generally of high quality. Its reporting staff was well-respected across the industry. But perhaps most telling, it also had the reputation for high ethics.

High ethics in this context means that neither advertisers nor research customers were allowed to influence the reporters or their stories. A vendor might pay GigaOm hundreds of thousands of dollars for various services, but all that green didn’t increase the odds a reporter would cover it – or on the chance that someone did write an article, no amount of cash would tilt the opinion-meter even a hair toward the positive.

We all agree that journalistic integrity is a good thing. Furthermore, both readers and GigaOm customers alike would admit that reporters writing what a customer wanted them to write would diminish the value of their editorial.

Nevertheless, if a research customer, say, were paying GigaOm tens of thousands of dollars to have an analyst write a white paper for them, then that customer might have the reasonable expectation that the editorial staff might at least give them the time of day.

Not so with GigaOm. “If you purchased research because you thought it would grant you any sort of increased standing with the editorial team, then you purchased the wrong product,” said GigaOm senior writer Stacey Higginbotham in April 2014. “We do not sell that product, because we are an ethical journalistic organization.”

Advertisers, furthermore, had no expectation of influence over editorial, even though GigaOm’s editorial efforts – and presumably, its entire business – depended upon this advertising revenue for survival.

Strict journalistic integrity combined with a challenging advertising environment likely spelled GigaOm’s doom. “The value of web advertising is declining,” explains Duncan Chapple, Senior Vice-President, Influencer Relations Research at Kea Company. “Customer-oriented sites can promote brand awareness within large audiences. However, business-oriented channels with focused audiences can only work with freemium models if they are delivering leads. Gigaom did not do that in a cost-effective way.”

How, then, are other tech news sites to survive? There is no simple answer to this conundrum. True, people value ethical, independent editorial, but if GigaOm was unable to build a long-term successful business even with the complementary revenues from its research and events businesses, then maintaining such a strict adherence to its ethics was a bad business decision in the end.

Remaining Questions

Clearly, GigaOm’s investors had tired of pouring money into a sinking ship and pulled the plug. But GigaOm’s financial woes had been brewing for many months or even years before the final curtain. Its imminent demise shouldn’t have been a surprise to anyone with insight into its books.

Why, then, didn’t it jettison the money losing part and keep the events and research afloat? Or presuming that Silicon Valley Bank (the trustee who now owns GigaOm’s assets, according to a tweet from Higginbotham) will be looking to sell off those assets, why didn’t GigaOm sell them off before having to cancel an imminent conference and allowing its staff to scatter to the four winds?

I’m sure we’ll find out eventually, but by then, picking over the remains of a once-vibrant company will be little more than an academic exercise. For now, consideration of the fact that journalistic integrity can work at cross purposes to a successful business model is food for thought that we should all digest.

Intellyx advises companies on their digital transformation initiatives and helps vendors communicate their agility stories. Jason Bloomberg occasionally worked for GigaOm as an independent analyst. As of the time of writing, none of the other organizations mentioned in this article are Intellyx customers. Image credit: GigaOm.

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