Digital First Media – the end of the beginning

This is a great time to be in the news business – if you’re not a newspaper.

Andreessen Horowitz just put $50 million into Buzzfeed, which values the company at around $850 million. That’s nearly half the New York Times Company’s enterprise value. How AWESOME and AMAZING is that – from cat videos all the way up to digital news contender worth close to a billion dollars. And Reddit, the anarchic online community where users decide the ranking of articles and posts, just closed a $50 million Series B financing round which values that company at around $500 million.

But John Paton, chief executive of Digital First Media, just told his employees that their company is “working with the investment bank UBS to review the strategic alternatives for our business.” No surprises there, his inchoate grab-bag of newspapers, strung together after a decade of mergers and deals and vulture debt, has long been a basket case that no amount of bluster from Paton could sustain. Now that the last vestige of legacy value has been eked out and his over-promised digital “transformation” has stalled, it’s time to go look for a mark, again.

You can boast all you like that you’re putting digital first, instead of print. But actually, all you’ve been putting first is digital technology. It was digital sensibility you were looking for. The technology looked like the answer to a prayer, too – the very same product, but no expensive ink, no paper, no kids on bicycles. But there’s no search, either. No social. No distinctive new market position. And worst of all, there’s no voice, merely the tinny sound of an ancient institution.

Go take a look at the digital products of DFM’s newspapers, but be warned – it’s like entering a time warp. It’s still distant newspaper editors perched high on a distant throne telling us how to look at the world. If you want to know what users today think of that, take a look at market engagement measures. No DFM product makes the top 25 sites in its local market.

Digital is a new distribution channel, sure, but that’s just 10% of the picture. It also fundamentally changes the relationship between a media product and its users – that’s the other 90%. Buzzfeed understands that. So does Reddit. DFM misses it completely. Still. Now that’s amazing.

It’s a big miss. It means the San Jose Mercury News, an early digital pioneer, is on the block, again. And the Contra-Costa Times, the Long-Beach Press Telegram, the Denver Post, the New Haven Register, and a couple of hundred other papers.

This was never, you see, about the future of newspapers. It was always about the search for assets and voices deep within them that might support the development and profitable delivery of brand-new digital media products. DFM never created, acquired or invested in genuine digital products, born on the web. They never figured out how. They never saw the point.

News, they figured, could only be of value if presented within the metaphor of a newspaper, by trained print journalists. Well, social media would have exposed the myth of Iraqi WMD. A blogger working out of his sitting room at home in Leicestershire, England, uncovered evidence of Assad’s poisonous gas. A part-time waiter with a cellphone unmasked Romney.

It’s not yet over. But as old Churchill said, this is the end of the beginning. McClatchy will be next.The infusion of cash from the sale of cars.com did nothing for the stock. But there’s been a lot of insider selling. That might suggest McClatchy’s at the end of the line, too.