Thursday, August 4, 2005

The $50 Million Dollar Site that Could: Will Topix Pay Off?

Thanks and a tip of the hat to Rafat Ali over at PaidContent.org for digging through the SEC filings on just what investments were made by newspaper bigs in the Topix.net news portal. Gannett, Knight-Ridder and the Tribune Company purchased three-fourths of Topix.net, as announced in March, worth about $50 million as a combined investment by Rafat's calculations. Individually these are chicken feed kick-ins from the major paper chains and a pretty good payback given that the Alexa stats for Topix show that since just prior to the March acquisition traffic is up more than 50 percent. Putting this in perspective, Topix traffic is ranked at 2,238 amongst all top-level domains on the Web, compared with the Wall Street Journal online at 639, Reuters at 396, Gannett's USA Today at 226 and The New York Times at 106 (Other sites such as Google, Yahoo!, ABC News and BBC News are in the top echelon of sites also but Alexa stats to not break out news pages separately). Pretty impressive for a Web site born in 2002. Topix aggregates news content from a wide range of mainstream news publications, showing its strength most effectively in localizing news searches by U.S. Zip codes and in effective use of general news categories. In addition to Google AdSense ads, Topix sells preferred placement in its categories to news providers wanting to stand out above search results.

We expect Topix to continue to grow appeal as a closed but relatively neutral source of open online content aggregation, building appeal for news browsers who prefer to get an objective categorization and search service without the hassles of subscription-based aggregation services. Topix gets quality news placed where users value news the most with familiar brand names and quality "born on the Web" content, both in the portal and via RSS feeds. Its search capabilities are not as strong as leading news portals such as Google News once you get past well-defined categories, or as sophisticated in its filtering capabilities as a Factiva or LexisNexis, but for most news browsers it will be quite satisfying. As to whether Topix, like many other news aggregation portals, can manage to get much cash flow off of limited ad capabilities remains to be seem but in the meantime it's helping major news outlets to contextualize their content pretty effectively. Not a bad investment by major news outlets learning to rub shoulders with Web content more effectively - all for chump change.
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