Ex-Gawker editor Choire Sicha on Valleywag’s demise

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Choire Sicha
(Courtesy C. Sicha)

Last week, when we heard Valleywag was undergoing a gestalt downsize, we thought we’d see if anyone had any thoughts about the move by Gawker Media czar Nick Denton. Taking the bait was New York writer Choire Sicha, a two-time editor of Gawker (‘the second and then again like the sixth or something’), regular L.A. Times freelancer, and now a member of increasingly large and prestigious underclass of jobless journalists. Sicha answered a few questions about Denton’s motivations, noting that all answers were speculative.

Does it seem like a straightforward business decision that Nick Denton would shutter Valleywag, a top 25 Technorati blog and Silicon Valley household name? Why or why not?

It makes sense from a business perspective in conjunction with the selling of Consumerist, and after the cross-company staff layoffs, and after the selling-off of the other sites they’ve already done. Plus whatever they’re doing to what they now consider the outlier sites.

Plus I don’t think this is the end of this stuff over there!

Is it a straightforward business decision? Hmm. Probably? Gawker Media’s advertising people are pretty top notch. So if they felt they couldn’t sell enough on Valleywag, that means ...

... it probably couldn’t be done. I mean, I can tell you as a reader, all that ad inventory was certainly not sold. Still, I can’t say I understand why not -- the site is regional, targeted and aimed at a group of people whose average income is insane. And for a niche market the traffic is good!

Denton says he’s cutting costs to stay ahead of a massive drop in ad spending next year (he sees possible 40% declines). Does it make sense that whatever cost savings Gawker gets from cutting Valleywag (one writer plus a little overhead?) would substantially impact the overall bottom line?

A couple of people, including some of his staff, have asked me to refute Denton’s arguments. Unfortunately, I can’t! And Henry Copeland, the genius behind Blog Ads, thinks the ad downturn could be worse than Denton projects.

Denton’s point overall is that a relatively (relatively!) slender margin of profit and a fairly robust spend on his sites will make an ad downturn uncomfortable, at best. Now, that totally accurate assessment shouldn’t be used to mean that he isn’t making money.

Looking at Gawker.com, let’s say the editorial costs alone for the site are $700,000 to $800,000 a year. (N.B. That is a rough estimate, not based on any knowledge I have from my time there.) It’s important to remember that this cost doesn’t include the expense of the centralized hub of ad people, development people, management, support people etc. that handle all the sites. Still, there’s definitely a fine amount of profit still stemming from that site, and from his other big sites.

But Valleywag, which probably had an editorial budget of between $300,000 and $400,000 a year, most likely has much less income, and while I presume it certainly paid for itself, it probably doesn’t do much to offset the costs of the company’s main office -- or, at least, it doesn’t if you factor in a 40% downturn.

If it makes $50,000 a month, that’s only $600,000 a year. It gets down to editorial break-even, essentially, with a 40% ad downturn.

But what does (or did!) Valleywag really make?

It’s impossible to tell what the ad sales for Valleywag are, but anecdotally, as a reader, I can say I didn’t see a lot of ads on the site. So $600,000 a year is my best guess, and maybe even a charitable one.

Paul Boutin links to this traffic chart in his Valleywag demise FAQ. What’s your read on these numbers? Do they look salvageable or would you dump the whole thing too?

I’d be very happy with four million page views based on half a million people per month:

http://www.quantcast.com/valleywag.com#traffic

But then I was always one of those people who would have been THRILLED to own Tribune when it was making 10% profit and the people who actually did own it were cutting it back relentlessly, thereby keeping it from ever having a hope of making money.

Does a well-known industry blog like Valleywag have intangible value that would justify keeping it alive even if it wasn’t making a lot of money?

Yes! Totally! God yes!

Denton obviously has a history of letting go of well-known brands. In your opinion, has he usually made the right call on these restructuring moves? Wonkette a few months before the election, e.g.?

I think -- and this is just what I think -- that the sprawl of sites is too much for him to manage. He tends to turn his attention to sites one at a time, to try to spiff them up, and then has to move on. Now that there’s no editorial director, that situation will be more extreme. I think he’s made too much work for himself.

Of course, the pared down and profitable look puts the company in excellent shape for a sale. Though I don’t think he’d sell until ’11. Or ever.

— David Sarno