Real dollars for Aussie online media company

Australian online news source,Crikey.com.au has announced the sale of the business to Private Media Partners (PMP) for AUD1 million.

I think this is big news because, as far as I know, it's the first time anybody has paid real money (rather than shares) to acquire an independent online publication in Australia. If I were Andrew and Louise at Urban Cinefile or Paul at Undercover, this could be heartening news. Maybe all those hard years of hard work for stuff-all reward might pay off after all.

If you value Crikey on its subscribers, the main revenue source, then PMP has paid about $190 per paid sub. That might assume an average subscriber lifetime of 2-3 years (a two year subcription to Crikey costs $160 and have to figure there's some churn too.) Many online businesses would kill to keep a paying online customer for two years. Mind you, there's no suggestion that there was ever much profit from those 5,300 subscribers, and I can't tell you whether that's an increasing number, or how fast it's growing.

The sale will be completed by Sept 2006, with no mention of performance benchmark requirements disclosed in the announcement.

Crikey's had a significant impact on the Australian business and political environment in its short life. About half-way through my time at Yahoo! I remember founder Stephen Mayne popping up on radar, parlaying his background as investor activist and journalist, using his natural flair for being a thorn-in-your-side, and standing up to the big end of town with a courage that bordered on the suicidal. It's exposed countless secrets and embarrassed those too powerful to be threatened by the established media, not to mention those who own the media themselves.

The Packer family has been such a frequent target that IT departments in CPH and PBL companies were told to ban internet access to www.crikey.com.au by blocking it at the firewall. Even one of my own businesses, HomeScreen Entertainment (I'm a founder, shareholder and employee), which had (CPH-owned) Hoyts Cinemas as a major investor, had its internet access to www.crikey.com.au blocked. Largely pointless, of course, because everybody has internet access at home, which escapes the blockade. Besides, most serious Crikey readers (me included) subscribe to the daily email newsletter, which apparently nobody thought to block. I suspect they knew it was just a token gesture, but were so pissed-off with Mayne's disclosures they chose to make it anyway.

From my own experience advertising on Crikey (for my record label, Littoral Records and the album Pacifico), Crikey has a lot to learn about online advertising before it delivers much additional revenue, but if I were PMP, that would be where I'd focus right away. Crikey's subscribers must represent a small but concentrated mass of net-savvy, online transaction-friendly, high-net-worth people mostly working in senior management, media, and politics. You couldn't reach them cost-effectively through any other media, and if you could reach them at all, you certainly couldn't track effectiveness online. Mayne's wife Paula has been acting advertising sales manager as well as "acting almost everything else" and that's the only reason why Crikey hasn't turned a real dollar out of advertising yet. I'm aching to offer to help but I wouldn't know who to call.

PMP's never done online advertising at all, and come to think of it... PMP's an offline media company acquiring an online media company for the first time. Offline media still don't have a great track record of 'getting' the net, or of letting online media do its stuff unfettered. I hope PMP goes into this hoping to learn from Crikey as well as grow it, because if they think they know how to do online media, they'll fail.

Anyway, by then, Stephen and Paula will have their payout, and their three children under the age of three (Paula, you're a Superwoman!) will get to go to a good school, and that's a happy ending if ever I've read one.