Henry Blodget's Risky Bet on the Future of News

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Blodget sees it as a simpler matter of being responsive to readers, something he believes the traditional media do a poor job of. "I think in 10 years people won't look at newspapers as the only model for real journalism—you'll have native companies built on the Web who have a very collaborative approach with readers and sources," he says. "Gawker and Huffington Post are both examples of companies that have had it tough and have had to be a lot more focused on what people want to read." Blodget's feelings about newspapers are no secret. The New York Times in particular rankles him, mostly over what he perceives as its attitude of entitlement and the systemic bloat that he argues should put the paper out of business. He and his investors don't see established websites like TechCrunch or paidContent as their competitors, which might explain Blodget's fixation on the Times. "I think Henry sees the real competition as established financial journalism that itself is moving away from print, like Dow Jones, Thomson Reuters (TRI), CNBC," says Hanlon. Some see TBI's coverage of the troubled print media to be less reporting than Holy War. "I remember a horrible New York Times earnings report came out, and they were all laughing about it," says Damian Ghigliotty, a graduate of City University of New York's graduate school of journalism, who left TBI after interning there for two days in 2009. (Blodget was not a party to the joking.) "It was hilarious to them that the traditional media companies were tanking. I wanted to turn around and say, 'You guys blog about The New York Times so much that it's surprising to me that if it were really going to tank next year that you guys would be laughing about it. Then what would you blog about?'"

For all of Blodget's and Ryan's ambition of replacing stodgy Old Media competitors, TBI has a ways to go before it will be considered the website of record. While TBI has had some news coups—like a rigorously reported history of Facebook—it has also published its share of scoops that turned out to be howlers. Famously, there was the item predicting that The New York Times would publish a story on Feb. 8 that would prompt New York Governor David A. Paterson to resign immediately; neither the story nor resignation followed (the Times did eventually publish an incriminating Paterson story). TBI also reported that Gawker Media intended to buy a vampire blog, only to realize later that they'd been fooled by a promotion for HBO's True Blood. "People talk about rumors all the time on Wall Street, and everywhere else," says Blodget. "I impress upon the team all the time to use their judgment and know that lots of people out there are trying to fool you. We can usually check things out very quickly, but on the other hand, let's not sit on something that will add value by introducing it into the marketplace by saying, 'Well, we'll just wait.' " After Mark Sanford's mistress' name was revealed, most news outlets refrained from publishing Facebook photos of a María Chapur from Argentina who may or may not have been the same María Belén Chapur identified as the mistress, but not TBI. Photos of the wrong María Chapur are still available on the site. TBI has also been accused of giving overly favorable treatment to Ryan's companies, such as Gilt Groupe.

Blodget concedes that TBI is not perfect. "It's not amazing yet. It's got a long way to go. But it's pretty good," he says. And if it gets great, and the world agrees, and if all that money being spent on print media finally migrates to the Internet, Blodget could end up like his pals Denton and Lerer, miles ahead of everyone else.

I ask him about the rumor that he hopes to be bought out by Rupert Murdoch or another Old Media titan. "I think that's a definite possibility," Blodget says. "I wouldn't be surprised at all if ultimately it made sense for us to combine with them. That said, we've also built an infrastructure that can support a very big business for ourselves."

Denton lays out the most optimistic scenario: "This is like the early days of cable," he says. "High—surprisingly high—startup costs. But eventually advertisers move across, and the margins are lavish for the leading players in each category. Jezebel becomes Lifetime, HuffPo becomes MSNBC, and Henry becomes CNBC." In that way, and that way only, Blodget would happily be right back where he started.

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