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New Startup Ongo Raises $12 MM and Starts Sprinting Off a Cliff

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The new company Ongo announced today that it’s raised $12 million from a handful of big media companies (Washington Post, NY Times, and Gannett who publishes USA Today).  The service they are offering is, according to the NY TImes article about the investment:

Ongo is for readers who peruse a variety of publications every day and want to read them all in one place. It shows articles from about 20 publications, and is in talks with dozens more.

The catch: Readers pay $6.99 a month for the service, while most of the Web sites whose articles it shows are free. In exchange, readers see no ads or cluttered pages, and can search for articles, save them and share them with friends — all from one site.

The article then has this quote from the founder, “I just don’t think my friends are as good as professional editors in finding stories for me to read.”

I don’t see any way for this company to succeed.

It will fail for two reasons:

  1. Nobody is going to pay for content.  It’s free now and will remain free for most readers.  If a NY Times article one day costs money to read, that user either won’t read it and/or will find a free alternative.  There’s a surplus of free content on the web.
  2. His quote, “I just don’t think my friends are as good as professional editors in finding stories for me to read,” is just wrong. I’ll grant that the Ongo service could better than going to just the NY Times, but pulling stories from 20 sites (even 100) isn’t going to be more interesting than pulling content from the millions that are out there – and my friends are doing a great job of curating them on Twitter, Paper.li, or in Google Reader.

On that last point, the key to web publishing is to harness the power of the people.  There are so many sites on the web, and new good ones emerging every day.  Let the people find the good stuff; use the crowd as a curator. Once users submit articles, then use another level of professional Editors to showcase the best of the crowd’s submissions. That’s what sites BuzzFeed and Gawker are doing. That’s the future, not putting up a Paywall.

This underscores the main problem with web publishing, and that’s that the traditional publishing model doesn’t work for the web.  The NY Times, The Washington Post and Gannett are stuck in a 1999 publishing scheme.  There’s a quote from Barry Diller from IAC in 2009 where he talks about web content, saying, “It is not free, and is not going to be.  Users just need to get back into the habit of doing so [paying for content] online” and then Rupert Murdoch of News Corp agrees with him, saying,  “Web users will have to pay for what they watch and use.”

Clay Shirky did a great job of interpreting these quotes.  His interpretation of what the large media companies are trying to say:

Web users will have to pay for what they watch and use, or else we will have to stop making content in the costly and complex way we have grown accustomed to making it. And we don’t know how to do that.

That is exactly right.  They don’t know how to change their model to adjust for the web economics.  You need less on staff writers, more freelancers, you need more articles, and more depth.  There exists sites that are making great content with this alternative business model, they are SB Nation, Seeking Alpha, Gawker, Breaking Media, The Huffington Post, and others.  It’s just sad to see Ongo’s investment today to create a $12 million dollar bandaid for large media.

** Writer’s note:  My new company, Kapost, is driving this new publishing model.  We make it easy for Editors to manage writers and content so they CAN create content cost effectively.

Written by Mike Lewis

January 26th, 2011 at 6:58 am

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