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Amid Fears of an Internet Downturn, Gawker Sells Properties
from the pop-goes-the-internet dept
Yesterday's news that Gawker Media will be selling three of its sites caught many by surprise. Particularly shocking was the revelation that Wonkette was among them — it was an early site in the network, and one famous enough to be featured in the newly-reopened Newseum.
But more interesting than the news was the reasoning behind it, which was explained by Gawker chief Nick Denton in an email to Fishbowl NY:
[S]ince the end of last year, we've been expecting a downturn. Scratch that: since the middle of 2006, when we sold off Screenhead, shuttered Sploid and declared we were "hunkering down", we've been waiting for the Internet bubble to burst. No, really, this time. And, even if not, better safe than sorry; and better too early than too late.
Everybody says that the internet is special; that advertising is still moving away from print and TV; and Gawker sites are still growing in traffic by about 90 percent a year, way faster than the web as a whole. But it would be naive to think that we can merely power through an advertising recession. We need to concentrate our energies... on the sites with the greatest potential for audience and advertising... [T]hen, once this recession is done with, and we come up from the bunker to survey the Internet wasteland around us, we can decide on what new territories we want to colonize.
Say what you will about Denton — and many people do — but he's proven himself to be a shrewd businessman. As he notes, it's easy to find wishful thinking when it comes to online advertising's capacity to withstand the recession that most experts say is coming or already occurring. But, as that second link notes, there's no denying that advertising expenditures declined during past economic downturns, or that online ads have fared even worse than other media. So while Denton is just one businessman, it's a safe bet that he's not the only one girding for lean times.
This isn't to say that the organizations buying these Gawker properties are making a mistake. Mike has written before about the need to marry content and promotion in a way that's compelling to an audience. Idolator and Gridskipper in particular seem well-positioned to do just that, as they join newly-consolidated ventures from Buzznet and Curbed, respectively (Wonkette, which exists in a media environment filled with publications that largely subsist on donor largesse, may have a harder time of it).
But whatever the fate of these particular sites, a recession-sparked advertising downturn would clearly be bad news for the web. With so much of the internet economy built on top of ad models — Google's foremost among them — vulnerable startups may do well to follow Denton's lead and hedge their bets now.
Tom Lee is an expert at the Insight Community. To get insight and analysis from Tom Lee and other experts on challenges your company faces, click here.
