Politico’s surprising business model (or why print is not the enemy of digital)

Michale Wolff’s Vanity Fair profile of Politico.com’s success includes this fascinating paragraph (near the bottom) describing how the company makes money:

Politico puts its current traffic at 6.7 million unique visitors per month (down from a high of more than 11 million during the campaign), yet it still can’t support its staff of about 100 on the Internet’s low advertising rates (although, with its agenda-moving audience and its preponderance of advocacy advertisers, it manages to get a higher rate than most sites). But one effect of its Internet traffic and notoriety and the ensuing attention of cable news shows is that the original…idea for a Capitol Hill paper -— one that now largely reprints Internet content — has become, with its special-interest-size circulation of 32,000, a major success. Internet cachet, in other words, has enabled a tabloid-size print version of Politico (also called Politico) to thrive and more than double the company’s revenues—which, just about evenly split between Internet and newspaper, will, it appears, be more than $15 million in 2009—meaning, according to C.E.O. Fred Ryan, that Politico, paying its staffers at nearly the level that The Washington Post pays (starting salaries for reporters at the Post are about $45,000 per year), has hit breakeven.

While the composition of that last sentence is fascinating, that’s not what I’m talking about. What I’m talking about is the mis-guided notion that “digital” is the enemy of print (as I discussed in an interview posted earlier this week on Econsultancy.com).

Politico’s success online and by its management viewing its reporters as a pundit machine for appearances on other radio, TV and cable outlets are the keys to it being able to drive $7.5 million in sales of advertising in a niche print publication with 32,000 circulation.

In other words, it’s not the “medium” of print that’s dying. It’s the business model of daily newspapers and mass-market magazines that is bringing down the “traditional” and big brands of print media. And in another other word, the “institution of journalism” and the “institution of the general-interest daily newspaper as we now know it” are not one and the same.

Likewise, it is not a foregone conclusion that the future of journalism is going to be digital only.

Print media and digital media are complimentary. The problems today are about business models, not the media formats.