Rather than building its affiliate linking business from scratch, The New York Times has decided to buy one.
The newspaper, which years ago charted a strategy of selling off its satellite publications, has made an exception to purchase one, The New York Times announced this morning. It will pay $30 million for The Wirecutter, the 5-year-old tech review outlet founded by former Gizmodo editor Brian Lam.
The Wirecutter, a bootstrapped company launched in 2011, was likely appealing to The Times for a few reasons. First, it makes the bulk of its money from affiliate linking fees, the price companies pay publications for referral traffic generated by links to their products.
This revenue model has been adopted by several online publishers, including Gawker Media and Vox Media, which are seeking new revenue streams to support their journalism.
The deal also gives The New York Times a huge back-catalog of product reviews, making it a destination for the kind of service journalism it's been creating of late with new verticals: Cooking (for recipes), Watching (for TV and film) and Well (for fitness and health).
As disclosed by Digiday in December, The Wirecutter has partnered with many news organizations — including The New York Times — in a bid for a larger audience. It's largely been successful, generating $150 million in ecommerce revenue in 2015 and punching way above its weight in terms of clickthroughs.
New York Times Company CEO Mark Thompson mentioned The Wirecutter's business acumen in a statement accompanying the sale, praising its "great, rigorously reported service journalism."
The New York Times is the definitive source for news, information and entertainment and now we’re working on becoming an authoritative destination for service journalism, with verticals like Cooking, Watching and Well. The practical approach that The Wirecutter and The Sweethome take to product recommendations embodies the same standards and values that are the pillars of our own newsroom. Their service-focused guides align with our commitment to creating products that are an indispensable part of our readers’s lives.
Lam will stay at the company in an advisory role. Editor-in-Chief Jacqui Chang and product director Christopher Mascari will remain in their roles. Ben French, vice president of NYT Beta, will integrate The Wirecutter and sister site The Sweethome into The Times company.
The deal is also an investment in changing The New York Times' culture. The Times, like other companies with newspaper roots, is looking to accelerate its digital transition, and buying a company with different subject matter expertise and a new business model is one way to accomplish that.
Similar thinking went into the Times purchase of About.com, a topical site with 500 verticals (which the Times later sold). It was a solid business but had a very different editorial standard than the Times itself. At the time, publisher Arthur Sulzberger said there were things the New York Times could learn as its owner about digital media for its core operations.