A new business model is emerging for media companies, consisting of a traditional core combined with a confederation of sites. Nate Silver‘s relationship with the New York Times and now with ESPN, and <re/code>‘s relationship with NBC and in it’s previous incarnation as AllThingsD with the Wall Street Journal, are examples. As more journalists decide to venture out on their own (Ezra Klein, Jessica Lessin, Andrew Sullivan), the model becomes more viable.
The confederation piece of this model is a group of autonomous websites partially owned by the larger media company, which also provides operational support. This works for the media company because it gets to participate in any potential upside, while continuing to generate revenue from the separated website, and works for the newly independent journalist because he or she gets capital and operational support while still running the show.
At the moment, however, the biggest obstacle to this structure is hubris. The media company believes that the journalist won’t be able to survive on his own, while the journalist believes the mother ship is dragging him down. Somewhere in the middle lies the truth. Some of these journalists will become success stories such as Walt Mossberg and Kara Swisher at <re/code> and Sharon Waxman at my own company, TheWrap. But it’s hard to build a digital media company and many more won’t make it, while others will find that they can live on their new business, but nothing more. And that’s the beauty of the confederation – the media company rides along with the stars, while those who are less successful will be happy they offset some of their risk.