With BuzzFeed and Upworthy reporting eye-popping traffic growth and planning to hire teams of reporters, many people are wondering whether sharing is the new currency of media success.

The idea is that if you give readers enough top-ten lists and animated GIFs they’ll do all your marketing for you. You don’t even have to worry about search engine optimization because nothing ever went viral on search. This philosophy has even given birth to a new style of headline writing that’s intended to stimulate sharing (“Why’s This Kid Throwing Coins? The Reason May Or May Not Blow Your Mind, But Something Does Blow Up,” reads one recent Upworthy example).

Henry Blodget

But maybe sharing isn’t all it’s cracked up to be. In a recent case study on USA Today, Michael Wolff looks at Business Insider, the hyper-caffeinated new-media brainchild of exiled Wall Street bad boy Henry Blodget. Business Insider is notorious for its fixation on being first and for driving its reporters to exhaustion. It’s a content mill – albeit with higher quality than many of its peers – that churns out large volumes of information in the quest to earn shares on Facebook and Twitter.

And it’s generating traffic: 25.4 million unique visitors in January, says Wolff. The problem is that Business Insider has low reader loyalty:

Only a small percentage of Business Insider’s traffic actually seeks it out and regards it as a worthy destination and a source with particular brand authority. Most other readers land on a Business Insider article because of search-engine results, or because of an engaging — tabloid-style — headline in a Facebook feed and other social-media promotions, which generate 30% of Business Insider’s traffic.

Wolff asserts that this drive-by traffic has little value because readers don’t identify with the brand. Worse is that the drive for big numbers becomes a race to the bottom.  As advertising rates continue to drift lower, publishers must seek ever-higher traffic volumes to stay in the same place. This means resorting to gimmicks like contests, cheesecake photos and celebrity gossip. That attracts poor-quality traffic which has low brand affinity and little value to advertisers. It’s a vicious cycle.

Digital Dimes

Blodget disagrees. In a response on Business Insider he says that the very problems Wolff cites are actually opportunities. New media companies don’t have legacy businesses to protect and so are free to disrupt mainstream competitors and steal revenue, he says. “We are better at serving digital readers than many traditional news organizations, so we can thrive on these ‘digital dimes,'” writes Blodget. His post displays a photo of what are presumably a group of happy young reporters in the company’s New York offices (Wolff says Business insider has hired 70 full-time journalists at a cost of more than $15 million a year. Do the math).

We think Wolff is on to something. Take a look at the chart below from the Pew Research Journalism Project. It depicts traffic to the 26 most popular U.S. news sites over a three-month period. It shows conclusively that visitors who reach a site directly (via a bookmark or typing the address into a browser) stay much longer, read much more and visit more often.

Source: Pew Research Journalism Project

This isn’t surprising when you think about it. Typing “nyt.com” into a browser is an act of brand affinity, whereas headline-clickers on Facebook don’t really care where the headline comes from. The BuzzFeeds and Upworthys of the world must compete headline by headline. Is that a problem?

Attracting readers with gimmicks is nothing new. One of the myths of the news business is that people read newspapers primarily for the news. The reality is that they read for all kinds of reasons. Any veteran of the pre-digital publishing days will tell you that an embarrassingly large number of traditional newspaper readers bought copies for the coupons, Ann Landers, comics, the Jumble and the daily horoscope.

But at least in those days readers knew what brand to buy. Today’s audience has more affinity to the content than to the publisher, and aggregators like Flipboard are constantly looking for ways to supersede publishers’ brands with their own. Brand still matters. A click is not the same as a reader.

Related articles

• Think Upworthy is Just About Sharing Great Stories on Facebook? You’d Be Wrong.
• The Lesson Small Online Publishers Can Take From Business Insider May Surprise You
• Why Michael Wolff Is Wrong
• New cash, new questions for Business Insider
• Upworthy co-founder at SXSW: ‘This is what media should do’

Marc Andreessen, internet pioneer and founder of Netscape at Web 2.0 Expo in San Francisco, CA (Photo credit: TechShowNetwork)

Pretty much anything Marc Andreessen writes is worth reading, and his latest treatise on the future of the news business should be required reading for any publishing executive.

The man who arguably started all the trouble with the invention of the Mosaic browser in 1993 isn’t just an optimist on the future of the news business; he’s positively bullish about it. But the future he sees is much more like the newspaper market of the turn of the 20th century than the one that dominated the last 30 years of the 21st.

His 3,000-word prescription boils down to a few basic points, not all of which are new:

Run the news business like a business. Take advantage of the many new revenue sources that are emerging, in particular native advertising and subscriptions.

Take advantage of media democratization. Sure, anybody can be a publisher today, but that’s an opportunity as well as a problem. Universal media access creates noise, which presents opportunities for aggregators to simplify the cacophony. It also creates the possibility of much larger audiences than we have known the past. “The big opportunity for the news industry in the next five to 10 years is to increase its market size 100x AND drop prices 10X,” Andreessen writes. In other words, throw out the business model that relied upon scarcity and replace it with one that values abundance.

Stop playing defense. The good old days of news monopolies and oligopolies are gone forever, so get over it and focus on the future. The few organizations that have successfully crossed the chasm – he mentions The Guardian and The New York Times – began thinking digital-first years ago. What are the rest of you waiting for?

Find new revenue models. Bitcoin is going to make micro-payments feasible, so study up and start experimenting. And tear down that Chinese wall. It defeats too many new business ideas. Outlets like the Atlantic and the Times are finding ways to make blended advertising and editorial work and actually growing their influence in the process.

Andreessen provides numerous examples of new and traditional media enterprises that are succeeding and growing. They include several that we’ve talked about here previously as well as a few that we haven’t, including Anandtech, The Verge and Vice.

On the subject of investigative reporting, Andreessen is almost sanguine. “The total global expense budget of all investigative journalism is tiny —  in the neighborhood of tens of millions of dollars annually. That’s the good news; small money problems are easier to solve than big money nightmares.” He believes a combination of crowd funding and philanthropy can more than cover the costs of the necessary Baghdad bureaus and investigative teams.”

The future of news will see fewer large media empires and many more small, focused enterprises. These organizations will take advantage of improved economies that enable them to reach vastly larger audiences at much lower cost than in the past. The mainstream media survivors will be those that move the quickest to tear down old infrastructure and seize every opportunity to reinvent themselves.

Can Technology Save the News?

eBay founder and news investor Pierre Omidyar

A considerably less optimistic but more diverse perspective is contained in an article from the excellent Knowledge@Wharton service. Technology Can Save the News — If Readers Change How They Consume It consolidates the opinions of several Wharton faculty members about how mainstream media can be saved. They agree that standalone, for-profit news organizations are unsustainable but that that independent journalism is too valuable to sacrifice.

The professors see promise in the interest of billionaires like eBay founder Pierre Omidyar and Amazon.com founder Jeff Bezos in owning media companies. Omidyar recently committed $250 million to a startup media venture run by journalist Glenn Greenwald and Bezos ponied up the same amount to buy the Washington Post last summer.

No one believes these investors are buying traditional media properties for their growth potential. Rather, they think media companies are undervalued and they may see synergies with their other businesses. For example, targeted advertising delivered by Amazon’s impressive recommendation engine could yield immediate sales for advertisers and drive up Amazon revenues.

Many rich people also have an interest in advancing political agendas out of either self-interest or ideology, and media companies provide an ideal bully pulpit. The risk is that these media come to reflect the politics of their owners too closely and contribute to the “echo chamber” problem in which audiences choose to listen only to the outlets that reflect their beliefs.

On this question, Wharton marketing professor Pinar Yildirim is cautiously optimistic. She believes that the proliferation of slanted outlets like Fox News will create a backlash as consumers seek independent voices. “Technology can bring us perspectives other than our own, if the ones designing it build that into the architecture, and the ones consuming the news are open to it,” she says.