Bleacher Report Founder On State of Sports Media, Business

Earlier this week I wrote a piece about ESPN shutting down Grantland that also discusssed larger sports media issues, particularly for writers. I was blown away by the quality of the responses I received. Thanks for all of them.

The most interesting, however, came from one of Bleacher Report's founders, Dave Finocchio, who sent me an email that I think many of you will enjoy reading as it offers instructive business lessons and strategic analysis of the online sports marketplace as well. I asked him if he was okay with my publishing it and he agreed. 

One of the things I genuinely enjoy now is talking with smart people in the sports media universe -- on the TV, digital, business, legal and editorial sides -- to think about where the marketplace is heading and discuss some of the challenges and opportunities facing the industry. Dave does a great job analyzing the relatively recent past as well as the future.

I think those who work in the industry, sports fans, and those who hope to one day be employed in this field can all learn a great deal from his email.  

So, enjoy:

By Dave Finocchio 

I enjoyed your take on the fall of Grantland and the current landscape for sports writers. I do think your view of Bleacher Report and SBNation as tech companies who view writers as commodities is a little over-simplified.

I can only speak for B/R, but I've always viewed content creators (like the actual individual people) as being pretty damn core to our business. We are very much a content company, not a product company, not a technology company. It just took a fair amount of time before I could justify hiring any high-priced talent from an economic standpoint, for many of the reasons you outlined in your excellent article.

I'm also a realist about what the masses of sports fans actually want, which is often different than the attitude that is projected by the influencer crowd on Twitter. Many other sites overpay for writers that are a) good but not great and b) don't excel in the other mediums (video, etc) you mentioned.

Here's my lens:

Both B/R and SBNation started in a world where Google News was the only viable distribution channel for reaching material audience. I had a product vision when I started B/R that is very similar to what Team Stream is today (a combination of original content aimed at younger fans and curation), but no investors would fund that vision because they didn't believe we could aggregate enough audience to build a real advertising business. As you know, digital advertising is pretty close to a zero-sum game. Unless you're a top 5 player in the space from an audience size standpoint, or you're connected to a network with broadcast rights, you're not really worth anything. Few advertisers are going to buy sites 1, 5 or even 10M people at a time.

Before Google News launched in December of 2006, it would have been impossible for any publishing startup to get off the ground. There was no other way to reach enough people to start a legit online advertising business. Hence, there was no real disruption in mainstream digital sports content for ten years prior to B/R and SBNation (Rivals/Scout were very different plays).

Google News incentivized publishers to create a large volume of content, and it incentivized publishers to keep users on their sites for as long as possible when they clicked on your result (why we went big in slideshows, people stay on for way longer on average than single page text article). Google News also revealed that traditional publishers were totally out of touch with what sports fans actually cared about. The supply/demand inefficiencies were out of control. I was an economics major in college, and I was dumb-founded by the size of the disconnect. I remember a meeting with the Managing Editor of one of the big sports properties, and I asked him how he decided what assignments he was going to give out that week. He said his writers would pitch him on story ideas, he would approve them, and then when he got back the final products, he'd put the article he liked best on the front page. When I heard that, I knew we had a great shot to win.

But I had basically no money to spend on writers/articles, but I also needed to create a large volume of content in order to scale audience and convince VC's that this was worth backing. So I built a large network of bloggers and other aspiring sports writers who could use B/R to reach a much, much larger audience than they ever could have on their own. We ended up hiring lots and lots of these writers, and many others went on to successful careers at other prominent sports properties. Obviously, there were also many writers who tried hard and didn't make it, which is why we get our fair share of crazies who think we screwed them. As soon as we could afford to pay writers, we did. I couldn't pay big names who brought in small audiences (many of your former colleagues at FanHouse, for example). I had a scarce amount of cash to spend, and needed to invest in writers I believed in, but also drove big numbers (Matt Miller, for example).

Compounding the issue is comScore's outrageous policy around rollup networks which strongly discriminates against startups. For example, B/R was bigger than NBCSports.com and CBSSports.com pretty early in the game, but because both had Biz Dev teams that rolled up dozens of other sites (many of which they didn't even sell ads on), advertisers would think that those properties were much bigger than B/R. So instead of needing to get to 12M uniques in comScore to reach top 5 in .com rankings, we had to get to 20M+ to beat out the network rollups. This does not incentivize behavior that is good for consumers in my opinion.

In 2012-2013, Facebook did a wonderful thing for the eco-system and started pushing publisher content in user's news-feeds to increase their sessions per day and time spent metrics. All of a sudden, sharable content became king, and publishers were incentivized to create a smaller number of really good (good meaning socially interesting) stories vs. a large volume to aggregate across thousands of different keywords on Google News. A win-win for everyone! So, good for all of the publishers and writers who've benefited from that change, but they've only done so because Facebook made it good business.

I think it's pretty easy to say that B/R doesn't care about writers, but if you spent one day inside our walls, you'd see that's very far from the case. It's true that we didn't build our business around writer brands, but I hope you can see that I avoided that road for good reason. Grantland (especially) and Sports On Earth are two examples of properties I really enjoyed as a sports fan, but with my business hat on, I was pretty sure they were screwed from the onset. Putting aside the fact that the market for intellectual sports content is very niche, in general, those guys just snubbed their noses at the rules of the game (the macro market conditions), thinking they somehow knew better. We didn't make the market conditions, but we did use them to build a sustainable business so we could execute on our vision for how we could make happier sports fans. I think B/R's current writers and the landscape as a whole is better off because of those decisions. And B/R now has a massive, massive content budget and lots of very well-paid writers. I'd be curious to know where you're getting your information from about how we compensate writers. I'm pretty confident our pay is right in line with all of the other big players.

I feel strongly that there's a pendulum in the the digital content business that swings back and forth between content/brand and distribution (as in which one is the more important driver of growth and financial success). The era I referenced from 2006-2013 was all about distribution. Distribution got disrupted, big time. User consumption habits changed (Facebook, Twitter, Instagram), and many traditional publishers were out of touch with their audiences, especially younger audiences (hard for 50 year olds to figure out what an 18 year old thinks is cool). Those who gave an audience what they wanted, where they wanted it, won big.

Distribution disruption has now settled, and we're swinging toward a period where the publishers with the most valuable content/brands are going to separate themselves from the pack. Cable is crumbling and distribution is getting more and more fragmented with no clear end in sight. Many traditional TV brands (like their newspaper brethren) ten years ago, are going to die, and they're being replaced by the digital native brands that create the most valuable content. The talent (whether writers, video, audio, mixed media, other) are going to kick ass if they can actually deliver the goods. But lots of people are good. You have to be great (at something, anything).

Anyhow, thanks for taking the time to write the article. This is a subject I wish more people talked about. Too many passionate, hard-working sportswriters spend years and years focused on the wrong things because they don't totally understand the rules of the game they're playing. I think it would be good for everyone if that changed.