- Mashable is an online media startup focused on covering social media that receives around 50 million unique visitors per month. While successful now, its long-term sustainability is uncertain. - Mashable relies almost entirely on advertising revenue but faces threats as tech giants like Google and Facebook allow more targeted advertising at lower rates. The entire ad-based business model is also at risk as companies can now reach consumers directly through social media. - To ensure long-term survival, Mashable is expanding its coverage areas but needs to be careful not to lose its focus on quality social media coverage, which is key to its brand identity and defending against competition. It also needs a true competitive advantage beyond its brand to survive changes in the digital

1. The Newsonomics of Mashable
Carl V. Lewis for Prof. Ava Seave, Making the Business of Digital Journalism Work
March 22, 2012. Columbia University.
Abstract
The following brief essay analyzes digital news startup Mashable.com’s
business model – and whether it can expect to maintain sustainability
longterm.
1 Introduction
On its face, Mashable.com seems like the quintessential online media startup
success story. In the six years since 19-year-old founder Peter Cashmore cre-
ated Mashable –– a then one-man blog dedicated primarily to covering the
burgeoning social media revolution –– the site has grown to become one of the
most trafficked destinations on the Internet, receiving around 50 million unique
visitors per month, according to Google Analytics, and maintaining a full-time
staff of roughly 50 employees. As a privately-held company, Mashable is not
required to disclose its annual profit statements, and Cashmore has repreatedly
refused making the company’s numbers public. Still, given Mashable’s presum-
ably modest operating costs as well as the advertising revenue generated from
its massive volume of traffic among a niche, loyal audience, it would be hard
to see how the site is not turning a considerable profit. Mashable’s current
success, however, by no means guarantees its longterm survival. In an ever-
changing digital media landscape, Mashable is still in many ways an old-media
company, tethered to the whims of advertisers for the bulk of its revenue and
reliant upon both its brand name and its established user-base to help it fend off
competitors. While the networking effect, brand reputation and consumer habit
may all serve as potential barriers to entry for competitors seeking to encroach
upon Mashable’s business model, none of those barriers provide the competitive
advantage necessary to ensure the site’s profitability in the long-run.
2 The Larger Digital News Ecosystem
2.1 Stability of ”Niche” Content
The past five years since Mashable’s launch have largely been the golden years of
the niche online content business. Sites with targeted, highly engaged audiences
such as Politico, The Onion and, yes, even Mashable, have managed to hang
on – if not thrive – in the digital age, even as many long-established general
interest news organization have struggled to break even on the Web. As tech
giants such as Google and Facebook continue to solidify their domination of the
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2. online advertising industry, online content providers have increasingly seen their
advertisers either defect in favor of the cheaper competition, or demand to be
given a lower rate. What has long insulated niche-sites such as Mashable from
this drain on ad sales, however, is that many advertisers have proved willing
to pay more to reach a highly-targeted, interest-specific audience that might be
more likely to buy its products than someone performing a Google search might.
For example, Mashable’s home page usually features advertisements from social-
media and tech-related companies relating to the site’s content –from display
ads for Adobe’s new Social Analytics software, to box ads for companies selling
iPhone cases. Such technology companies may be more likely to do business
with Mashable, at least in theory, because it allows them to spend their ad
dollars most effectively by targeting only the types of consumers most likely to
buy their products. Yet the fundamental flaw in this reasoning going forward
is that, as technology evolves, media distribution giants like Google continue to
develop better and smarter proprietary algorithms and analytics, which allow
them to target hyper-specific subsets of consumers just as effectively – if not
better than– any niche content provider can. And Google and Facebook can
afford to charge significantly less for their ad space not only because of scale,
but because they don’t need to hire sales teams to make sure that advertisers
buy enough of their ad inventory. The advertisers come to them.
2.2 Dependence on Flagging Advertising Revenue
Once again, it remains important to remember that Mashable’s revenue is based
almost entirely upon ad dollars, which add up quickly for a site receiving 50
million unique visitors per month. Yet in an era of growing disintermediation,
where companies now have the ability to reach consumers directly through free
online publishing tools, the entire ad-based business model may be on the verge
of extinction. Not only have the barriers to entry collapsed, but the primary
revenue stream itself has come under question. The rise of self-publishing and
social media has empowered both consumers and advertisers to forge a greater
connection with not just people, but businesses. Ironically, Mashable could one
day lose its revenue stream because of the very same thing that gave birth to the
site originally: social media. It should be noted that Mashable has the benefit
of its brand name to help it stave off the potential loss of advertisers who may
switch to cheaper, social media marketing campaigns. Even in its brief five
years of operation, the site has already earned a considerable degree of respect
within the realm of social media and consumer technology coverage. This brand
awareness could potentially give advertisers an incentive to pay a higher rate to
do business with Mashable as a way to give added credibility to their products.
3 Strategies Going Forward
3.1 Expansion of Coverage Area
Now, with the site’s immense success in achieving the attention of a niche audi-
ence, Cashmore has decided to expand Mashable’s coverage to a wider array of
topics, with a business, entertainment and U.S. and World section. In its quest
to expand its audience, however, Mashable should be careful not to divert too
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3. many resources away from the quality of social media coverage it is been known
for, or else it risks losing one of the few things that could help it fend off future
competition: its brand name.
3.2 Cautious Collaboration
Even its brand name, however, is not a real structural competitive advantage,
though. And without a competitive advantage, Mashable should continue to
work in tandem with its competitors–– participating with, aggregating from,
and linking back to the broader network of social media and tech news –– so
that Mashable and its competitors can at least all share the market rather than
allowing even more competitors to impede on their shared business model he
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References
[1] K. Grove-Rasmussen og Jesper Nyg˚ard, Kvantefænomener i Nanosystemer.
Niels Bohr Institute & Nano-Science Center, Københavns Universitet
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