How Money Is (Not) Made In Auto Journalism

Illustration for article titled How Money Is (Not) Made In Auto Journalism

Do you work in an industry that is fundamentally broken? If you do, does it leave you unsettled because you don't know how best to react? That terrible self-pitying need to sit and moan with your colleagues about the desolation of the wider situation set against the exciting knowledge that now is the time you might actually be able to winkle yourself some audience share. It fries my brain.


My world – that's the one which both reviews cars objectively and uses them for more base entertainment purposes is about as broken as they come. I spend too much of my time sitting at my desk, or sitting in cars thinking about how I can somehow navigate a way through it. Or what's to become of it? Or whether I'm a mug to assume I can maintain some kind of presence in it for the next decade? And that can be a lonely pastime, so I'm going to share some of it, dear reader, with you.

All of this is a bit weird I know. This is unquestionably the best job in the world. I know as much, I'm eternally grateful for the chance to do it, and I want to do it forever. Hence the reason the edifice all being a bit wonky right now is the cause of some consternation.

The base problem

Why is the business of reviewing cars broken? You can point to all manner of factors, most of which I'll trawl through here at some point, but the fundamental issue is that making money from the process has become too difficult for most. It's a classic case of a conventional business (print) being decimated by something new (the web) underscored by one uncomfortable bleak structural issue, that the old way of doing things (paper) still often generates more money than the new way (internet). Loving my brackets there.

The print problem

And so all the while print runs are shrinking and the advertising coin is leaving print, and in most cases it is not reappearing in the digital replacements. The main exception is if you're a big consumer review catalogue on the interweb, all five star reviews and manufacturer hand-jobs, the cash is probably rolling in as makers attempt to tactically position themselves against rivals. But that's not really the side of this business people like us care about.


The content driven side: the great stories, the spellbinding photography, that's the bit that's taken the hit and looks unlikely to recover. Magazines have less space and budget for indulgent features, yet they feel unwilling to post such long-form content on their websites because they don't want to upset that rapidly dwindling print readership. And you know what? Just giving shit away for free doesn't make those who created it feel especially good.

The web and e-reader problem

Then there was the iPad revolution and Apps and inApp marketing and magazine editors poncing around auto shows talking of media empires displaying some beautiful interactive magazines on their tablets. All of which happened to be a 1GB memory cluster-fuck and, for most mortals, impossible to buy. And not ideal for reading mid-shit. So no one bought them.


Will a conventional website ever be able to serve longer-form content in a way that replicates your favourite magazine? I don't believe it will. Its best chance was through the tablet, but that can now be called a failure and the whole concept of people ditching paper for pixels seems to have ground to a halt. Sales of Kindles literally dive-bombed over the Christmas period in the UK. Of course, part of this problem is that if you offer people a choice of words on a page, or a video player to click, they choose the video....

The video problem

...Which leads us further into the story of fragmentation – a narrative bollocksed by me and my pals from /DRIVE (which I was a part of and still own a portion of), who came along and gave away shed-loads of pretty good video because YouTube gave us lots of money. It was all actioned, to mirror the process mentioned earlier, with no end game. We came, we disrupted, we trusted that YouTube had a plan to monetize all these gadzillion video views and maintain the momentum (hindsight, dear chap, hindsight) and then YT stopped handing out cash and the music stopped. And someone had removed half the chairs. Balls.


There was and is very little money in internet video. But your instincts tell you that because we love making it and people love consuming it, it must make commercial sense. Wrong answer. That assumes all market economies adhere to some form of common sense, but people still buy Priuses and drink terrible beer, so that's all bunkum.

The car maker as broadcaster problem

These are the organizations on which everything has always depended. In the magazine world you make some money on cover price, but most of it comes through display advertising from the big hitters. They're quite clever people these car-maker types and it dawned on many of them that rather than funding some slightly second-rate iPad crap and some shonky videos on the old YouTube, broadcast by the same crusty old magazine titles, they might have a go at broadcasting content themselves. I mean think of the upsides! No negative sentiment around the product, no half-witted media company to cock up your ideas and you even get to save money! This has ramifications on the print side too - have you seen how sexy some car makers' own books are these days? The Lamborghini magazine appears to be printed on card.


And that's kind of where we are now. The car maker as broadcaster, video being the content people appear to want but with no real commercial structure to support it, the website unable to do anything but flush advertising inventory against shitty, vanilla consumer reviews and the iPad magazine already looking like the Beetamax of the e-content generation.

Oh and with Jalopnik taking the piss out us all mercilessly and drawing enough readers to make some coin to boot. Smug wankers.


It's at this point I must confess that I don't have many solutions to many of those problems. But I'll have a stab anyway.

The print solution?

Not looking pretty on either side of the Atlantic. As a magazine man through-and-through, I say that with a knot in my tummy – but most of their circulations are dwindling to the point that the publishing decisions behind them are driven out of a base survival instinct. And that's when the whole thing turns to shit – the divide between editorial and advertorial blurs and you end up with brazen bias, compromise and awards. Lots of awards for people who do lots of spending with your magazine. How lovely.


Am I looking for some publishing utopia? A place where brands and advertisers cower in the face of integrity and circulation, where they take the rate card between the cheeks and suck up the invective because they simply need to be there? Nah, those days are long gone. Only Top Gear has that clout and the quirk of the BBC charter means it has to show balance over time, so not every Prius can be shit-canned. Which is a shame.

I just want some balance returned to the places I love. I want the books to make indulgent features and be able to re-set the business model to a sensible cover price. What's sensible? $10 is sensible. You'll pay $5 for a beer that disappears in a matter if minutes, a magazine is worth more than that. If a US car magazine can sell for $10, it doesn't need to shift 500,000 copies a month, and that's when you can change the model.


The web solution?

My only utopian ideal is a reversal of the web's most pernicious legacy: Persuading a generation that content not only has no value, but doesn't ever deserve to have a value. Or maybe that should read 'content that deserves to have a value can attain such status.' Just as everyone that makes a car is now a broadcaster, so every prick with a keyboard is a commentator. Or a blogger.


Many of them are very good; more of them are terrible. I have no problem whatsoever with shit being given away for free – that's the essential brilliance of shit, it can be free – but when it dresses itself up as content and deepens the fragmentation and confusion in the space, and starves the good content of revenue it needs to survive – well, then I think everything is upside-down.

Does Jalopnik sit as a irritant in that process? Nope. It's the template for free content, but it's probably not repeatable, so none of us should waste time attempting to do so.


The notion of an internet where free isn't an automatic assumption? Not impossible, but certainly a few decade's work.

The paid video solution?

I'm not sure. Someone will figure out the pay video model, but it'll take some time. Drive + proves there are enough people willing to pay for content, but if all content goes behind a paywall, as some people believe it will, then smaller verticals will inevitably suffer. Five bucks a month seems sensible for something you enjoy, but if you need seven of those subs a month, many people will baulk at the cost. Lumping yourself in with other verticals might not provide any safety in numbers either. And if you're me, from the content creation side, persuading Porsche to let you drive the new hyper car when your videos reach 12,000 people is not an easy task.


The free video and television solution?

I think I have something approaching a plan, which is actually quite different to the plan I had when I launched a YT video channel seven weeks ago. This is the core issue I mentioned earlier – the place is broken, but it changes so damn quickly, and that makes it so exciting. With no previous activity to base your decisions on and no old spitters telling you what to do, you just march, scrotum-first into another piece of guesswork. The morning I sent the YT channel live, I had no idea something called Patreon existed, now it might account for a good percentage of revenue for 2015. That's amazing... or the worst possible foundations for a stable business, depending on your outlook.


Furthermore, it asks more questions about the relationship between web-based video and 'proper' television. Three years ago, there were stark differences between the two in terms of production values and output, but not any more. A decent web car-video could now go straight to broadcast. And distributed that way, it might actually make some money. The more you scrutinise the problems web-video content has monetising, the cleverer the network television model looks. In just the same way any brutal deconstruction of the car enthusiast website inevitably leads to the discovery that the content needs to be delivered regularly and readable on the toilet. In other words, a book.

Are we all missing something?

I'm certain we are. The speed of change is such that there is probably some nascent technology lurking that will mean you'll view Jalopnik through the inside of your eyelid within three years. But we have to deal with what we know; or at least what we think we know.


I think I'll stop there. I have no idea what the answers are.

All comments are invited. All ideas gladly accepted, plagiarized and implemented.


And remember: I really love my job.

Illustration: Sam Woolley


For the sake of the audience who wants further detail, I figured I'd chime in here.

As a fellow owner of /DRIVE alongside Chris, and someone who has produced videos in the automotive industry for the past decade, I must confess that this topic has caused many gray hairs on my head at the age of 29.

In the broad sense, Chris is right about this topic, but there are a few items that need to be expanded. (I reached out to Chris and he suggested I post a reply.)

1. This is NOT an auto-industry specific issue. These are issues seen in many industries. What I find interesting is that it happened first in automotive. With tens of billions of dollars worth of vehicles sold each year, the automotive sector is used as a tool to forecast media spend in other industry. Why automotive first? More product and a faster product cycle. Quarterly, not annually.

2. The money is still there, it's even increasing, but its being spent in different ways. Chris brought this up with manufacturers becoming the broadcasters. This is a VERY true statement. But not in the way you'd expect. For example: Advertorials. Ads disguised as editorials. It exists everywhere. Some shameful, some tasteful. In the past few years, /DRIVE has had some good examples, and some not so good examples. But thats the point, it's constantly evolving. Some innovative and brilliant integrations into existing car-media brands, others disgusting. Ad looks like a review within the magazine/content, but is actually paid for by the manufacturer, and most times, its their voice. There's one particular magazine that doesn't even list advertorials as sponsored content, I rather not name names publicly, but when did we forego ethics? The brilliant integrations are the ones that make me smile. Because I know how hard it is to tell a brand's story sometimes, especially if the product is weak. To pull it off right is better than any other accomplishment in this space. For the record, advertorials have been around since the 70s, it's not going away, but their presence is growing. Comments that suggest, "Just get advertisers to run an ad at the front of the video" - those ads, pre-rolls, don't make as much money as you think. $2-4 for every 1,000 views on YouTube. Do the math yourself if you don't believe me.

3. We are at the mercy of our own decisions. Both on the consumer level and the producer level. As a consumer, I personally always want the best possible product, even if i have to wait for it. I fear that I represent a small portion of the population that still believes in this. In today's "WANT IT NOW" society, its hard to win over the general population of consumers. And for those who steal quality, you're the reason we can't have nice things in the house. (CRED to Mike Spinelli for that line.)

As a producer, it's the same thing. For /DRIVE, it's simple: Content is king. Win over the top enthusiasts, the rest of the audience will follow. Build the best possible product, it may not be a winner out of the gates, but you'll reap the rewards over time. Winning over the enthusiasts makes them your cheerleaders, the ones willing to spread the word on your behalf.

When YouTube pulled their cash, we were on our own. We knew it was coming, there was no shock, and certain members of our team freaked out a little too much. It was expected. This is where I pose the question: Are you chasing short term cash or long term gold? I want to use /DRIVE as an example for how we can redefine how content is consumed. With money/profit growth taking a backseat to ethics and authenticity. Luckily, we had a beautiful brand and a sizable back catalog. More importantly, we had a plan: /DRIVE+, our pay per view business model.

The ad revenue on YouTube is there, it exists. This is where I want to clarify something from Chris's article. There is no doubt in my mind that hundreds of millions of dollars of ad revenue is being spent on YouTube channels. The problem? There are too many niches. It's like that time in the mid 90's when cable went from 50 television networks to 900. You actually find yourself only watching 2-3 channels now instead of 40. Too many compartments where your eyes get lost. I thought YouTube was suppose to kill the cable networks, not replicate the same fucking problems!

YouTube tried to combat this by creating MCNs, or Multi Channel Networks. Side note: One day I'll write a book about all the terrible MCN meetings I went to. There was one company that brought a contract to the first meeting and said they could bring great talent to our network if we signed, Matt Farah being one of them. I had to remind them that Matt was already on /DRIVE. Due Diligence? I think not. Idiots in LA...

Back to my point: How to make money online:

Make the best possible product and learn how to market said product appropriately to your customers: Your audience.

/DRIVE+ was a success on launch. We hit 13,000 subscribers in three weeks. And then, almost as soon as we started promoting it, the world blew up on us. It felt like we were the last people on the front line, holding a pen while the internet came at us with swinging keyboards and mice. "Paying for content? Are you insane?" We looked back and everyone else had jumped ship. We tried to fight, but eventually, we had to play dead. (But we knew it wasn't dead.) The moment we stopped promoting /DRIVE+, subscriptions started growing again.

Let me repeat that because it's so insane, I want to make this point clear: The moment we stopped promote our paid service to our existing non-paying customers, paid-subscriptions started growing. The negativity stopped and it became acceptable. Go look on the comments of the recent /DRIVE+ videos, I'm not making this up.

It is one of those weird moments in life where you recognize you're in the middle of something fascinating and new. There is a shift in how we consume media, and we are witnessing it at this very moment. We're the first movers. We focused our SVOD strategy on /DRIVE+, providing just as much content as we were before, but packaging it differently. We stopped marketing on /DRIVE, to our existing audience. Paid subscriptions continue to go up.

We are in a weird place right now as content creators. Some traditional rules work, others don't. Take the kitchen sink and throw it out the window. Look at where it lands and which way it's pointing (It doesn't point) - That's just as much direction as we have right now for making paid content work online.

There have been some VERY smart people who have guided us. The fact remains: Money CAN be made with online video. Just have an open mind and faith that as long as you're right 51% of the time, you'll be alright.