paidContent for sale: Is there a market for media intelligence? Let’s hope so

Update: A Guardian spokesperson has contacted me to say that the company "does not recognise" the mooted $15 million to $20 million guide price figure, and in fairness I should have made clear that was according to Peter Kafka's sources. GNM also say they haven't confirmed a cinema ad campaign either, as reported by Campaign today.

Update 2: TheWrap.com reports that Alan Meckler's WebMediaBrands, publisher of MediaBistro, is in the running to but ContentNext, and not for the big numbers that have been reported elsewhere.

Original: Fancy buying a digital media news pioneer? It’s yours for just $20 million It's newly available on the market. As has been rumoured for some time, ContentNext, publisher of digital media economy news and analysis site paidContent.org has been put up for sale by its owner Guardian News & Media, as AllThingsD and PC itself reports.

Bankers at Coady Diemar Partners have been instructed to find bidders for the business, which includes the flagship paidContent.org, paidContent:UK and MocoNews.net and employs 16 staff and contributors, in the $15 million to $20 million range. As my colleague Rory noted, that does seem quite high, despite robust traffic figures (808,000 unique users in October across all its sites).

Founder Rafat Ali, who left the business in Summer 2010 to take in some serious globe-trotting, says he’s “not in the market to buy back media sites”. I mused on Twitter that Aol might be a likely candidate to snap up paidContent into its new media network, but I now hear authoritatively that Aol is not in the running.

So what went wrong with the marriage of paidContent and GNM?

It’s been a rocky ride for the business since its acquisition by GNM in 2008, despite the continuing quality of its work. As someone who joined as a staff reporter soon after the acquisition, I can say that the relationship between the Guardian and this start-up it had acquired was cordial but often strained.

There was little sharing of resources, no sharing of office space (in the UK and in the US, most editorial staff were working in their living rooms) and it took several months to agree on the protocol for sharing stories across platforms – perhaps the most simple synergy for two digital media businesses to organise.

The paidContent business model does not seem to have evolved beyond events and ads. A move into research reports was ill-fated, with the hiring of media academic Lauren Rich Fine to produce intelligence reports not providing much of a return on investment. The roster of conferences was healthy, with three well-attended events in New York in 2008, run over two days. Now the business relies on its flagship paidContent event.

Guardian editor-in-chief Alan Rusbridger's question to crack the American market - the claimed reason for the ContextNext purchase - is now taking precedence. Campaign reported today that GNM is considering spending £2 million on a US brand advertising campaign in cinemas (GNM made it clear to me this is not confirmed).

The big picture

The PC purchase was designed to be the start of something much bigger. As Simon Waldman, former director of digital strategy at Guardian Media Group, wrote in his book Digital Disruption, big media companies need to invest outside of their core revenue areas and one of the best ways to do that is through acquisitions. He cites WPP and UBM as two media giants that have perfected the art of buying up promising digital businesses.

As he put it to me in an interview in January after joining LoveFilm as product director, the plan to inject that theory into GNM didn’t work out:

“The hardest deal is the first one… If you take a deal like paidContent, that should have been the first of many moves and we just didn’t have a follow-up. The challenge was that you have to make that work, but it was too small a move to make a dent on its own.

“paidContent’s fantastic, it was good then, it’s great now, but as a business it’s only meaningful to a company the size of GMG if there are six or seven deals like that. It’s very difficult when you have to prove the return on that investment quite quickly and if it takes longer that can be deemed a sign of failure. But in fact it’s proof you’re heading in the right direction.”

It’s significant int he context of paidContent's sale that Waldman, former GNM managing director Tim Brooks and GMG chief executive Carolyn McCall are no longer with the company.

GNM is clearly still interested in vertical based publishing and networks, however. Curiously, Guardian Media Network  is "coming soon" and described as " a community for professionals working in global media and technology". The irony of a company setting up something probably in competition with a business it's selling may not be lost on ContentNext staff.

So will anyone buy it? GNM says it has received expressions of interest, but that could mean anything from a serious offer to a speculative punt. It’s safe to say paidContent is a low cost operation. It has great brand loyalty and good potential to build its events and paid-for intelligence portfolios. It has a strong record on attracting talent (I do not include myself in this – traffic appears to have gone up significantly after I left!) and its commitment to breaking news and analysis is now a benchmark in the industry.

But here’s what really matters: if there is no market for paidContent’s impartial, informed and honest reporting, while so much lazy, uninformed, linkbait-driven, speculation-heavy tech/media reporting remains, then we really are in a pickle as an industry.

Disclosure: I worked as UK correspondent for ContentNext for 12 months during 2008/9 and left to go freelance.