BusinessWeek Spent $16M On Middling Social Networking Site
The management at BusinessWeek must have taken the magazine’s endless parade of breathless Web 2.0 cover stories to heart. The New York Times reports that the deeply indebted magazine spent $16 million building a social networking site that has made just $600,000 in revenue. How?
The site, Business Exchange, is a subdomain of Businessweek.com. I signed up for an account to see what it was all about; basically, it’s an easily searchable groupblog on business that lets you friend people. People post links to articles from outside sources and comment on them, and bx.businessweek.com takes a sliver of credit.
It’s all fine, but $16 million is a wildly uncompetitive price for a site that seems to exist as a forum-based add-on for the much more successful LinkedIn, whose users it entices with one-click registration. Adam Tinworth has a theory as to where it came from:
They’re a big brand, from a big company. They clearly need a big, expensive infrastructure, or so the thinking goes. Unfortunately, that rather ignores the fact that the products they’re trying to compete with run lean and fast.
It’s easy to mock BusinessWeek for its folly, but it at least had the foresight to see that online ad revenue from editorial content is just one way for a publication to make money online, and arguably less important than other avenues. But if the execution is poor, a good idea is just as harmful as a bad one.
(h/t Adam Tinworth)
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