6 months in, journalist-owned tech publication 404 Media is profitable | Hacker News Reader

6 months in, journalist-owned tech publication 404 Media is profitable

niemanlab.org

112 pointsSLHamlet33 comments

> The four cofounders each own 25% of the company, and at launch each put in $1,000 to cover initial costs. Koebler declined to share current revenue numbers, but said the company is profitable (and that everyone’s been able to pay themselves back the money they initially put in).

Profitable doesn't mean much then.

> “We’re on Apple News now and in the process of enabling monetization there…I suspect that when we turn it on, we’ll be making $20 to $100 per month"

Except profitability in this case is actually sustainable, and can grow naturally over time. Good things take time, and wall-street's obsession over the next quarter, and the belief something can grow infinitely create self-imploding businesses.

Contrast the success of 404 Media to the recent collapse (and subsequent deletion of all published articles) of a well-funded media startup The Messenger (May 15, 2023–January 31, 2024) [1].

The Messenger began with "an investment of $50 million from American businessmen," whereas 404 Media began with just $4000 (from the article: "The four cofounders each own 25% of the company, and at launch each put in $1,000 to cover initial costs."). That means that the staff of The Messenger faced much more external pressure to increase revenue, which led to pressure to publish more clickbait articles, according to reporters there [2]. 404 Media doesn't have the same pressure.

It's great that 404 Media is thriving, but I do feel like it's a bit of a shame that The Messenger shut down—they published some well-written articles about the impact of new US regulations on cybersecurity (but the articles are gone now). This doesn't mean to say that new media publications with large funding is doomed to fail: another recent startup called Semafor, founded in 2022, received an initial $25 million in funding and appears to be doing well [3]—interestingly, a good portion of their revenue is from running events.

But a lack of heavy external investment looks like a positive for 404 Media here, as the journalists there have more time and leeway to pursue investigative and tech-focused stories to differentiate the publication from other outlets.

[1] https://en.wikipedia.org/wiki/The_Messenger_(website)ownersh...

[2] https://www.washingtonpost.com/style/media/2024/01/31/messen...

[3] https://en.wikipedia.org/wiki/Semafor_(website)

I've really enjoyed the privacy/security angles. It's great to hear they're already profitable.

Also, I was wondering why they required me to add my email to read the articles, and now I know!

  > The four cofounders each own 25% of the company, and at launch each put in $1,000 to cover initial costs.

That's not much at all, are the founders the only employees, and the other expenses are all hosting costs?

  > Koebler declined to share current revenue numbers, but said the company is profitable (and that everyone’s been able to pay themselves back the money they initially put in).

  > Every month, the team meets (virtually) to decide how much they can pay themselves. (The number changes each month, but everyone gets paid the same amount.)

These two sentences don't say much, so they got back the $4000 the four of them put in, and are covering costs, but does it pay enough to make up for whatever salaries they had before.

  > everyone makes their own art for stories instead of paying for agency photos.

Not bad, mostly looks like photos with some minor editing, no AI art. This may be an interesting bootstrapping model to follow for other online publications.

If their not paying themselves, they’re definitely not profitable

Yeah, from the article it seems they're not losing money, and made back the original $4000 investment they put in, but highly unclear if they're paying themselves livable salaries or just a split of the revenue (which could be significantly less than market-rate wages)

Just a thought I had, but if democracy is good, then why are publicly traded companies ran like oligarchies and private companies ran like dictatorships? Shouldn't cooperatives be the default? If the argument is cooperatives don't function as well, then isn't that an indictment against democracy? In any case I find it contradictory that democratic countries are essentially hosting non-democratic business entities.

I could see an argument that if you bootstrapped your company, then you're entitled to more power, but if you retire or step down, then shouldn't the business convert to a coop? One has to wonder how Google, Microsoft, and Mozilla would fair as cooperatives. It makes for an interesting thought experiment.

There are some large coops, such as (iirc) SAP.

Democracy is more about selecting the leader than about leading, though.

Publicly traded companies are ostensibly democracies. It's just one vote per share instead of per person.

> In any case I find it contradictory that democratic countries are essentially hosting non-democratic business entities.

As one of my favorite econ books puts it "corporations are chunks of central planning in a soup of free market".

Corporations only make economic sense because of the Coase Theorem: the transaction costs of reaching consensus agreement on all topics often costs more than can be gained by doing so.

It's a good idea, particularly for firms that don't need much capital per worker like a small software company or convenience store.

I would only add that for companies that are stewarding costly production goods - like a steel mill or chip fab - socially rational decisions are much more likely to be made if there is representation of other stakeholders on the board. For example: the regional government and representatives of workers in sectors that use the firm's output or produce its inputs.

Democracy is resilient, autocracy efficient [1].

A democracy encapsulating lots of little autocracies is the best configuration we’ve found, though they do get eclipsed by autocracies in the short run.

[1] https://en.m.wikipedia.org/wiki/Theory_of_the_firm

Co-op are vulnerable to the capture by leadership like other types of companies. REI is a co-op of members and has been moving towards being normal private company. One change was only the board can nominate board candidates.

To make companies more democratic would require changing the rules. Like opening up board positions. For public companies, maybe get rid of proxy voting and vote online. Online voting would allow for important votes away from shareholder meeting, like selecting a new CEO. Another would be to give employees and even customers votes. Maybe have them elect separate board members.

It’s not a contradiction. No one is compelled to participate in private business, but we all are subject to government rule, which is necessarily messy, slow, and inefficient as the democratic government must reckon with many voices.

>“We see how Google is degrading in quality. We see how AI content mills are digesting our stories and gaming the system to get more views than our original reporting they’re ripping off,” cofounder Emanuel Maiberg told me an email.

Putting content behind a wall doesn't solve the problem, at least not fundamentally. As I'm not seeing them having completely unique stories, there will always be AI content to compete with.

>As I'm not seeing them having completely unique stories

Not sure if I'm reading this as you intended, but 404 broke multiple interesting stories first including the one about the Russian with no ticket or passport who ended up in LA.

> there will always be AI content to compete with

Current generation AI cannot compete with investigative journalists. An AI currently cannot maintain a network of sources, follow up on leads, double check statements of different sources to see if one is lying and so on.

The primary currency of an investigative journalist is trust. Trust from the sources that the journalist will publish their story correctly. And also trust from the public that what they write is true.

Of course an AI can help you write the story. But at the end of the day you have to build the whole structure on trusting that there is a human I can trust at the foundation.

Why would sources and whistleblowers trust current generation AIs? How do they know openAI and co is not listening? Why would the audience trust the current models? They have shown that they can hallucinate things regularly.

Their podcast is pretty great too. It's nice to hear the inside scoop on some of the stories they've broken.

I’m surprised by the model of making new articles free and old articles available only to paid subscribers (with some exceptions). I would have guessed the opposite.

I think it's a savvy move. It removes a very common layer of friction when clicking through to a linked article, and makes people more likely to click your links.

And then you're able to effectively monetize the pieces of older content with lasting value. Incentivizes good, in-depth journalism.

They've been doing exceptional work. Glad to see the co-op style publication working.

I don't know if I want to subscribe. But what I do know is that I don't the price, but to know the price I must first provide my e-mail address. Nope! Give me the price before I give you my e-mail address.

Edit: Oh, it's behind JavaScript. I disable it all the times. Well, whatever.

Good for them, but wow, what a terrible publication name. The first few times I clicked into a 404 Media article from HN, I immediately left because I thought the link was broken (404).

Plenty of tech news sites don’t have this problem and aren’t profitable. Feels like it’s not much of an actual problem. It seems like a problem at first in your story, but also consider after you left the first few times you eventually learned not to and you now know it’s a functioning site with that name. As a bonus it created a memorable story that you were compelled to post about.

Doing something poorly just for the novelty factor, requiring your users to find workarounds, is not quite the win you think it is.

Told me an email? Looks like whatever this publication is could do with an AI editor.

> “We see how Google is degrading in quality. We see how AI content mills are digesting our stories and gaming the system to get more views than our original reporting they’re ripping off,”

The irony is that 404 Media does almost none of their own reporting. The vast majority of their content is just rehashes of other articles with a strong layer of commentary and a sensationalist headline.

> “Our goal is to find niche communities and see what they care about, what they’re happy and excited about, and what they’re really upset about,” Koebler said.

This is a return to the original newsjacking model that powered blogs for so long, but it's kind of disingenuous to claim that they are pulling themselves up on their own bootstraps when they are really growth hacking off of prior work and communities.

This is false.

I'm just going off of the stuff that I see hitting HN regularly:

https://news.ycombinator.com/from?site=404media.co

There are a few investigate pieces behind paywalls, but it doesn't look like that's what's paying the bills.

This does not reinforce what OP originally claimed.

> This is a return to the original newsjacking model that powered blogs for so long, but it's kind of disingenuous to claim that they are pulling themselves up on their own bootstraps when they are really growth hacking off of prior work and communities

What the heck do you think journalism is exactly?

You go out to people and you talk to them. You write about stuff. Investigating a niche community and writing about it would be what is called "Human Interest Journalism"

I'm seriously not sure what your gripe is here.

Well, traditionally journalism relied on a strong network of bureaus, editors, and beat reporters. That model did not survive the internet and became way too expensive in an era when "information is free". Our idea that bloggers are journalists is kind of like a shift to microwave dinners being considered meals.

They are just as much selling these stories to the communities as they are reporting on them. They'll find what topics are pushing people's buttons the most, they will write an article about how much it pushes their buttons, and then ride on a wave of attention from that community. It's more growth hacking than it is journalism.

My only gripe is that they call out others for the exact same kind of behavior they engage in.

Reply on news.ycombinator.com