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Saturday, April 07, 2007

Jason Calacanis: "Sam Zell is going to lose billions and the Washington Post has no idea what their talking about"

Calacanis reminds us that snippets (especially opt-out available snippets) aren't stealing. As for newspapers themselves being on the decline, no question.

The longer debate is which old media companies are reinventing themselves at a reasonable pace. Most large companies have diversified holdings - why would newspapers be any different, and what is stopping them from restructuring, reinventing, investing, and thriving? Nothing, of course.

It appears troubling how frequently the big media (not just newspapers) have misjudged, misinvested, failed, and divested, in Internet stuff that just didn't catch fire.

I'm not sure what the difference is between success and failure here - is it startup culture? Or do most of these new ventures fail -- whether they emanate from old media, the major online players, or startups? That's probably more like it.

Now I'd love to see a list of what counts as stupefying success on a large scale with online content or local news and listings, on a par with newspapers of any size in their era. If it's The Drudge Report, then we're really just talking about cultural trends and a fascination with a bunch of "hits" on a website... not a major economic powerhouse.

To be sure, there's a reliable list of a dozen or so major online properties like Google, and big time startups like YouTube.

And yes, Craigslist, et al.

About.com? Ahem, bought out by the New York Times.

Great companies like Trader Media, now owned by Yellow Pages Group, started out in print, and they're moving over to online. But right there is proof that a traditional migration does make sense, and a traditional company, not a startup, created the majority of wealth for shareholders.

From an economic standpoint, the direct analogs of (or rhetorical competitors to) newspapers -- your world's hugest blog networks, for example -- only throw off a few million in cash a year at best. One of the most notorious ones sold for all of $25 million. Nick Denton, a leading blog tycoon, has said there's really no serious money in it. Some of the startups, like NowPublic, are cool. But until proven, they're hobbies or quick flips to Yahoo/Google/IAC, etc.

Newspapers and the diversified media companies that own them, somewhat analogous to Chrysler, may be old and crusty, but they're BIG. Other than Google, and the other 20-30 or so big online plays worth mentioning, most of the folks involved in newspaper-hating startups are longshot bettors. Are they sitting on a goldmine so rich that it makes sense to taunt traditional media conglomerates? The jury's out. Broadcast.com, Youtube, etc., all got out and acquired (for Yahoo/Google billions) before they had to prove up their biz models with serious revenues or profitability.

Conclusion: if Zell's smart, he can have his cake (sexy new media acquisitions) and eat it (trustworthy old media cash flow and editorial integrity & quality) too. And the startups that matter and thrive will seriously consider taking investment from old media; they're not averse to cake + cake themselves.

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