The New Big Business of Some Media: Selling Technology (To Other Media)
“The media industry is slowly becoming a subsector of the technology industry.” As explained by the international expert in the digitalization of companies Lucy Küng. He gave a lecture on the current blurring of barriers between content and technology, before a packed audience of more than 200 professionals and academics in journalism. The researcher was not only referring to the demand for attractive journalistic content by large platforms such as Facebook or Google.
The media, traditionally involved in their editorial work, are being forced to innovate in the technological area to respond to the new demands of their users. These processes result in tools such as applications, bots or content management systems (CMS), among other solutions, which end up making the difference between competitors. For this reason, they are covered by other means and, at times, end up being marketed to generate alternative means of income for the owner companies.
Let’s analyze this market trend focusing on CMS. These cases are the most striking due to the high economic cost of operations and the profound consequences they have for the companies that acquire them.
The value of content management systems for the media
Having a powerful content management system has become an indispensable necessity for all the media that claim to have a prominent digital presence. The fundamentals of web pages depend on this tool, such as structure, appearance, navigation, stability, and security, as well as other more advanced features.
As several specialized studies have pointed out, the effects of these technologies are not limited to the journalistic product, but also enhance certain organizational aspects of the companies. By using an effective CMS, you increase worker productivity, automate tasks, streamline workflows, and improve knowledge management and transmission.
However, this technology is expensive. Creating your own system, fully adapted to the needs of the environment, requires a multitude of human resources. Digital journalism expert José Manuel Rodríguez explains that CMS technical development and maintenance teams often need a technical director, a system chief, a chief of development, system administrators, analysts, and programmers.
The Arc Publishing-Chorus battle
WordPress is the most popular CMS across the board. The W3Techs report reveals that almost 35% of Internet pages and more than 60% of websites with CMS rely on this technology. It is a 16-year-old service, almost free since it involves an investment of less than 100 euros a year in hosting and domain. That is why beginners are using it to create their website. For example WEBTCHSKYetc
WordPress is a simple system that has plugins for almost everything, according to CMS expert Jorge Mediavilla. However, it lacks other benefits that proprietary CMSs do, such as high flexibility or a comprehensive role management system. Its characteristics cause it to be chosen to start the websites of some media, such as Jot down, the international Techcrunch and the Chicago Sun-Times.
A frequent alternative for some of the major media is bCube Publisher, a CMS created by Bitban Technologies a decade ago. Used by brands such as Mediaset, Atresmedia, eldiario, it enters the league of the great CMS, with powerful editing features, user management, roles and templates, and a higher price, according to its benefits.
However, the great battle to become the benchmark CMS among the media is fought between two giants: Arc Publishing, by The Washington Post, and Chorus, owned by the Vox Media group. Both come from contracted media companies, so they offer unbeatable publishing environments for other headlines.
Chorus is the oldest of the two since it was created in 2012, although it did not begin to be commercialized until last year. Arc was conceived in 2013, coinciding with the purchase of The Washington Post by Jeff Bezos, and it was released just a year later. During their period of existence, both have reaped good results and the trend continues to rise.
Currently, both firms are fighting for the same market opportunity, but their approach has been in opposite directions. Vox Media started by offering Concert technology to other groups, an advertising market that is now part of the Chorus package. For its part, Arc started its career as a CMS and has subsequently added features, such as the Zeus marketplace, which aims to compete with technology giants such as Google Adsense.
According to an analysis published by Digiday in July, there are some differences in the characteristics and orientation of the tools, despite their similarity. While Chorus does not include resources to enable user subscriptions, its possibilities for creating communities are more powerful than those of its competitor.
On the other hand, although these CMS are useful for any firm with digital publishing needs, Chorus and Arc are now targeting different sectors. The former remains focused on attracting digital media companies. Instead, the second has redoubled its attention to capture other types of strong brands. In fact, in September 2019 it has published its agreement with its first Non-media customer: the energy giant BP.
The CMS war in numbers
Arc Publishing is slowly becoming the new standard for publishing in the media market, according to analyst José Manuel Rodríguez. More than 600 websites already use this technology, including the likes of The Boston Globe, Los Angeles Times and Chicago Tribune, etc.
There are no precise economic data on the returns achieved so far by the CMS, although it has transpired that the tool is not yet profitable. However, it is expected that in the medium term it will reach the figure of $ 100 million in revenue and be established as a third way for the company, after advertising and subscriptions. The calculation is based on the trend in sales, which doubled between 2016 and 2017, and doubled in the following year.
This was expressed by Shailesh Prakash, vice president of product for The Washington Post. He also explained that Arc Publishing depends on a structure of more than 250 workers, in charge of developing and maintaining the tool, as well as offering customization services and technical attention to customers.
Chorus’s late entry into the market has caused it to not yet have as much penetration as its competitor. The technology began its journey as a service to third parties in July 2018, offering its solutions to twenty publishing groups. A year later, it had already supported more than 350 websites, according to data published by Vox Media.
Chorus had around 150 workers in the middle of this year, divided between the content manager itself, the Concert advertising network and the community administration package The Coral Project. Also, the 200 professional barriers were scheduled to be breached by the end of 2019.
Nor have the amounts paid by Vox Media for the sale of its software license been made public. According to The Wall Street Journal, Vox Media was 15% below the expected income for the past year ($ 200 million), so other publications indicate that the company can search its CMS for a way of income that will help meet the goals in future exercises.
Regarding the costs for the client, there is no fixed price in any of the two CMS, but it varies depending on their needs. Other information from the Wall Street Journal revealed that the sale price would fluctuate in a range of between six and seven figures. Data that, according to NiemanLab, has been confirmed by TreiBrundrett, Chief Operating Officer of Vox, who added that the amount could even be higher if negotiated with larger companies.
Arc Publishing offers two types of packages. On the one hand, the editorial and launch tools of the site, which are charged according to bandwidth and traffic; and, on the other hand, only publishers, whose cost depends on active users and the use of resources. Chorus is paid in advance, and its budget is calculated based on the expected traffic of the site, to which an initial fixed rate is added.
Factors in buying a new CMS
The reputation of the owning company is one of the CMS ‘most notable cover letters.
It essential that the tool is ahead of the environment and not in tow, thereby gaining agility and growth potential to implement new solutions at the headwaters.
Reliable technical service is essential, among other things, to minimize problems at the time of migration. The media has large volumes of content that must be adapted to new templates, labeling systems, and tools. As De Santos explains, “when we change CMS, we change hosting and we change everything. So, in that move, it is very likely that something will remain, but it is a risk that must be taken.”
The CMS completely determines the way to reach users and, therefore, the relationship of digital newspapers with their audience. Content managers must be able to offer a good user experience, even adapting navigation to the profiles of each of the visitors. For this, it is necessary to have highly efficient user segmentation and clustering technology.