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In a world filled with content and media companies struggling to make ends meet, Seeking Alpha stands out.
By emphasizing nitty-gritty financial analysis and breaking news, the company has carved out what appears to be a lucrative, revenue-generating niche.
The revenue, in turn, enables Seeking Alpha to pay its contributors handsomely. Founder David Jackson said recently that the site will soon be paying out $300,000 per month to its contributors, a crowd of about 7,000 independent analysts and freelancers who are paid $10 for every thousand pageviews generated by their copy.
If you’re not in the content business, this number might not raise your eyebrows much, but trust me: A $3.6 million annual freelance budget is pretty damn impressive for any independent media company, let alone a startup whose content is mostly crowdsourced.
Jackson and his investors (Benchmark, Accel, and DAG Ventures) are even starting to attract attention from potential acquirers. Not that they need it.
“Our VCs probably think of me as someone who is committed to building a really large company because I turned down an acquisition offer by a large, well-known Internet company and because I rarely think about or discuss an exit strategy,” Jackson recently wrote on ReplyAll, a fledgling discussion site.
When I asked him, Jackson wouldn’t give me any details on the acquisition offer, except to say that it was unsolicited (he hadn’t been shopping for a buyer or putting out feelers) and came from “a leading Internet company.”
Seeking Alpha got where it is without fancy graphics or high-end design. In fact, the Seeking Alpha home page is just one notch above Craigslist in terms of how text-centric and minimalist its layout is.
“Investors use us as a work tool. They want to access information quickly and efficiently, and [they] value screen real estate,” Jackson told me. “Pictures and video generally offer little value to them. This is an example of how our focus on being a must-use tool for investors produces radically different results from sites that view themselves primarily as media businesses.”
As for the revenues and profits, Jackson wouldn’t give me any specifics, except to say that he and his investors “are very optimistic about our revenue and margin potential.”
“We think Seeking Alpha can be really big,” Jackson said. “The investment research market is worth at least $7 billion annually. But it’s broken. Sell side research analysts — I was one — don’t have skin in the game, aren’t opportunity driven, are often conflicted, and have no business model for coverage of small caps. In contrast, fund managers, buy-side analysts, industry experts and smart individual investors possess remarkable amounts of valuable investment insight. This is a market ripe for disruption by the Internet.”
Seeking Alpha, which employs 118 people, appears to make most of its money from advertising. It sells ads to brands (such as brokerages and banks) that are eager to reach a large audience of serious investors. Jackson says that 1.3 million people have subscribed to the site’s real-time e-mail alerts, another 1 million have subscribed to its newsletters, and it has 100,000 daily readers of its apps. As for the main website, it reaches 8 million unique visitors every month, who collectively generate 73 million pageviews, according to the site’s media kit (.pdf).
But advertising is just one of three main sources of revenue. Content licensing is another potential source of revenue, though Jackson didn’t elaborate on that.
And the company sells some of its content to readers: Its Seeking Alpha Pro product offers high-value content — stories that promise “asymmetric risk/reward,” or in betting terms, an “edge” — for $250 per month. That gives subscribers exclusive access to these “Alpha-Rich” articles for 24 hours before they’re published to the rest of the site’s readers.
Ultimately, the site’s goal is to become an indispensable tool for traders. Jackson says that it’s getting there: Almost every professional investor he met on a recent trip to New York said they used the site.
And Seeking Alpha’s site is starting to have a real market impact.
“We regularly move stocks,” Jackson said. “In future, it’ll be hard to be a successful trader without knowing in real time what’s being published on Seeking Alpha and how it’s impacting your stocks.”
That profile is not too different from the strategy used by Politico, which has turned itself into an indispensable tool for Beltway types by focusing on rapid dissemination of politically useful information. Like Seeking Alpha, it uses apps, e-mail alerts, newsletters, and a high-volume website to reach its readers wherever they are, whenever they need the news. Like Seeking Alpha, Politico is generating healthy revenues, and has reportedly been profitable for several years — despite reports of a possible recent decline in its reputation.
It’s a smart strategy, even if not every media site can adopt it: Focus on a definable market and really own it by providing information that people in that market need to get their jobs done.
Now if other media companies can only follow the same strategy. Newspapers, are you listening?