GigaOm: Digital Media’s Canary in the Coal Mine

GigaOm was one of best and first digital tech journals. Om Malik is a fine thinker and writer who hired the best journalists and kept expenses relatively low (for San Francisco).  He also realized early on that he couldn’t sustain his brand of journalism on advertising revenues alone and diversified into research and events. In this, he was like many of the other tech blogs that have sought to replace the trade press of yesteryear. He also raised venture capital — far in advance of the stampede into digita media exemplified by Jeff Bezos, Pierre Omidyar, and Chris Hughes.

But last night, after a great run, the rubber hit the road and the lights went out at GigaOm:

Gigaom is winding down and its assets are now controlled by the company’s lenders. It is not how you want the story of a company you founded to end. 

Every founder starts on a path — hopeful and optimistic, full of desire to build something that helps change the world for the better, reshape an industry and hopefully become independent, both metaphorically and financially. Business, much like life, is not a movie and not everyone gets to have a story book ending. 

There will be time for postmortems, but not today. Today, I want to thank all the people who make (and have helped make) Gigaom. Their role in this journey was what really made it all worth it. They are great people and they will all do great work wherever they go. I want to thank our investors who believed in the business long before it became fashionable. And most importantly, I want to thank you dear readers for coming along on this trip of a lifetime. 

I might have left Gigaom, the company, over a year ago, but Gigaom, the  idea still lives in my heart.

Goodnight sweetheart, I still love you!

GigaOm was the dream of a tech journalist who worked himself nearly to death getting his dream off the ground. It cost him a heart attack in his forties. But he never realized how much his company was dependent on his brand, and when he quit writing regularly to join a VC firm, GigaOm slid slowly downhill. Research and events didn’t sustain the company, they probably drove higher overhead without producing proportional returns. In the end, GigaOm wasn’t really a company at all; it was Om’s lifestyle business.

It’s demise is very sad, but it’s only the tip of the iceberg. Trade magazines used to provide very nice lifestyle businesses for their founders, existing on a mix of subscriptions and advertising. And yes, sometimes events. The problem with that time honored model is that on the internet, almost all information is available for free. That means digital advertising revenues are not what print revenues used to be, and subscription models don’t often work. The arrival of VC money into digital media was always wrong-headed, because VC money needs big returns, and these tech blogs, or political blogs, or financial blogs will never provide that. At the very best, rolling them up into a large network like Gawker or AOL-Huffpo-TechCrunch can put off the inevitable, but there is no real revenue model for quality digital trade journalism (yet).

The last great hope is sponsored content, aka native advertising. In this model, a company like GE (an early experimenter in this arena) or Google/Facebook /Twitter with deep pockets and some stickiness itself hires the wonderful reporters and editors who would have worked at GigaOm and allows them to write quality journalism in exchange for brand loyalty, visibility, attention and trust. Trust is a very effective currency in the digital age, and if enterprise companies can allow themselves to operate with trust  as a first principle, they can garner brand equity available in no other way.

The way we see it, the major advertiser might be GE or Facebook or Google or Twitter, but other smaller advertisers who wanted to partner with the enterprise brand could also play a role. There’d be less advertising, better targeting, and more attention as the result. This would also work well on mobile, where most advertising will end up in the streams. In the industry we would focus on quality, not quantity, and we’d use the available technologies for refining our targeting. Of course we would have to give up our focus on scale, but that’s okay. What we want is readers and conversions, not page views or “impressions.”

Let GigaOm’s demise be a lesson to those of us in the industry. Let’s go deep, not wide. Spray and pray is not a strategy.