Case study: Ars Technica (USA)

Based on an interview with Ken Fisher, Ars Technica founder August 17 2011. The numbers are from the early days from the site and before Condé Nast acquired it 2008.

The name of the publication and / or company

Ars Technica

Established

July 1998, LLC

Web Address

http://arstechnica.com/

Describe your site or business in few words.

Ars Technica is a publication that’s really devoted to telling the story of the interaction of IT and culture. They do news and reviews articles but focus on technology from a pretty broad angle. Ars Technica tries to put everything into “big conversation” about technology, no matter if its gaming, science or Federal Policy on broadband.

Staff numbers

Who’s creating the content

Content creators, paid full-time

The first few years there were two.

Content creators, paid freelancers

The first few years five freelancers.

“Our business was built for IT professionals, IT enthusiasts.  Those guys have a lot of job opportunities out there and they make pretty good money working in tech. Because our writers weren’t journalists, they weren’t expecting to be paid a dollar a word. We could get a lot for our money because these IT professionals were doing it for fun or for whatever reason other than trying to be a journalist. I was coming into this field from the outside, from academic world, and paying a dollar a word didn’t make any business sense, especially online. In the academic press you write a 80,000 word book and if you can get anybody to give you $3 for it, you’d be lucky.”

How is your time divided between doing business and content?

Ken Fisher did not enjoy selling ads, and he was “the business person, GM, product guy and the publisher” responsible of revenue. So he chose ad networks early on and had to work with business side only couple of hours a week. Ad networks took a hefty cut, but he certainly thinks it was worth it. He didn’t hire an outside general manager or marketing person to build sales team to avoid costs and expanding headcount.

“I could spend all my time being an editor and chief. Which is really I think where the time in content business should be spent. I didn’t see a lot of benefit in spending a whole lot of time dreaming up incremental revenue streams.  You know, launching a newsletter, launching an event, launching all the stuff, it just didn’t appeal to me. We were just focusing to build an audience those first five or six years. I didn’t see a huge reason to double my revenues the next year, I’d rather double my readership.”

How they make money

Revenue models and sustainability

How much is your yearly or monthly revenue?

Less than six figures a year the first few years (under $100.000).  The first year (1998) it was only few thousands a year, enough to pay for the hosting. They broke six figures after the first dot-com bubble broke in 2001.

Where does your revenue go?

Ars Technica spent a lot of money building a community platform in the early years; it cost more than the actual hosting of the site. Until 2001, hosting a community platform was an expensive task because it wasn’t a basic web application like it is nowadays.

How much do you pay to your contributors?

Ars Technica has always paid for stories and made it worth contributor’s time. But since many of the writers have full-time jobs and live abroad, they don’t really want the money.  There has been a bonus system as well.

“From a very early period on we’ve tried to set up an incentive system. If people were consistently producing articles that generated a lot of traffic, we would make sure that they received some kind of bonus.  It wasn’t a formal structure and the goal was never to generate extra page views. But we always stopped and looked and said, oh, well, you know, in the last four months these were our best five articles, we have to make sure that these guys get some kind of compensation for above and beyond kind of what we agreed to.  And that too has helped kind of build a certain degree of loyalty. We’ve always tried to make it so that the people who are writing for us are getting something more out of it than just a byline. Sometimes it’s all people wanted in those early days.”

What about profit?

Ars Technica spent it in more writers and produced more content. They were careful to stay on the non-full-time freelancer arrangements. They rather bought stories from niche experts and covered lots of different topics than hired someone to cover one area full time. Owners did not pay themselves a full-time salary in the beginning.

What kind of advertising you sell?

Ken Fisher is happy that the site moved from CPA (cost per action) to CPM (cost per mille) quite soon, sold via Ad networks. First it was Burst Media, then FlyCast and on to Federated Media.

“Federated was responsible for serving ads, for tracking ads, for inventory, just for all that stuff. It would have been a nightmare to do it in-house.”

Today they do also lots of sponsorship deals: they build features and series of reports and ask companies to sponsor them. Fisher thinks it is one of the best ways to marry advertising and in-depth content. Advertisers don’t have any control over the topics or content.

With Condé Nast, Ars Technica started a newsletter as well. To Ken Fisher’s surprise, it works really well.

Ars Technica sells subscriptions as well, since 2001. In the beginning, $50 a year membership gave you access to subscriber-only parts of user forum. It started as a plea to readers: please support us. They have less than 10.000 subscribers right now. According to Fisher, there’s a surprising number of people who want to support you.

With subscription, Ars Technica started converting longer articles to pdf and offering them for download to subscribers. Now they have moved to ebooks: biggest success so far is OS X Lion operating system review, 19 pages long. The $5 ebook sold 3000 copies in the first 24 hours on Kindle.

Ars Technica has done merchandise but Ken Fisher doesn’t think it is a real revenue stream but it is a great way to get people excited about your brand.

Do you see your publication as your main product?

Yes. Ken Fisher has “zero interest” to make it just a brand for “that other stuff.” He thinks the event marketplace in the tech field is too crowded.

What would be the most important thing on your road to sustainability?

Believing in what you’re doing, have passion for it.

“If you don’t just love it then it’s going to be a terrible, terrible grind. The site has to become a family member or you know your spouse or it has to become an appendage on your body. Maybe if somebody handed me $5 million in VC money and said here, go, create the world’s greatest publication about Pokemon… maybe I could do it, I don’t know, I kind of doubt it though.“

Second is to take a hard look at the marketplace and find something that makes your publication special, finding your niche. Don’t try to be the next Wired or Mashable.

“The the sad reality is if you go in like that, it becomes a race to the bottom. In the sense that if you kind of compete with everybody else on their own terms then the only way you’re really going to compete with them is – is to kind of do what they do but maybe do a crappier version on some level. Don’t just try to be 30 seconds faster regurgitating the same stupid bloggy content that’s going to be on five other text sites in 10 minutes anyway.”