Saturday, November 04, 2006


Business Week writer says OhmyNews unable to make sustained profits

Business Week Online posted a story Nov. 1 by the magazine's Seoul bureau chief reporting that citizen-journalism pioneer OhmyNews is struggling to make sustained profits. To blame: The competitive online advertising market. Still, the outfot supports over 65 professional journalists on $6 million in annual revenues.


Media November 1, 2006, 8:42AM EST text size: TT

OhmyNews' Oh My Biz Problem

Moon is BusinessWeek's Seoul bureau chief
With Kenji Hall in Tokyo

The Korean site for citizen reporting hasn't had much success so far with its moves into other markets.and it's in the red at home

by Moon Ihlwan

Remember all the hoopla about the disruptive impact to mainstream media from "citizen" journalism? One of the pioneers in the field is Seoul-based Web site OhmyNews. It made a huge splash in 2002, when its unique brand of participatory journalism by amateur writers played a critical role in the South Korea presidential race.

Few doubt that OhmyNews, which galvanized younger voters, contributed to the election of President Roh Moo Hyun, who was portrayed by Korea's mainstream newspapers as a dangerous leftist with little chance of victory. OhmyNews readers, prompted by citizen journalists' reports that Roh was trailing in the vote, sent out a blitz of text messages urging friends to vote for Roh, and he prevailed by a narrow margin."Ordinary citizens found a medium to serve their interest and express themselves," says OhmyNews Chief Executive Officer Oh Yeon Ho.

OhmyNews has since become one of Korea's most influential media outlets. However, the site continues to look for a profitable business model and is expected to lose money in 2006. This comes after a several years of very modest profits. OhmyNews, set up in 2000, now has about 90 full-time staffers.65 of them journalists.and some 44,000 citizen contributors. Together, they produce around 150 articles a day. This year, it expects revenues of about $6 million, 60% of which come from online ads and the rest from the sale of the company's news product to Internet portals, and from miscellaneous services.


Oh is hoping to expand the company by exporting his citizen-journalism approach to foreign markets, but right now OhmyNews remains more of an interesting online editorial experiment than a viable business. "I think it was a Korea-specific phenomenon," says Park Sung Hee, journalism and communications professor at Ewha Woman's University in Seoul. Other industry watchers also express doubts that citizen journalism will turn out to be a going concern. Had it been an attractive global model, "someone would have made lots of money by now," adds Stephen Bear, Seoul-based director of McKinsey's Korean operation (see, 5/4/06, "OhmyNews: "Voices from the Street").

Indeed, dozens of media outfits inspired by OhmyNews, including U.S. journalist Dan Gillmor's Bayosphere, didn't pan out. Internet analyst Jay Park at Samsung Securities in Seoul argues that OhmyNews was successful because it was politically motivated, not business-oriented. Liberal Koreans, particularly those in their 20s and 30s, have held a deep distrust of mainstream newspapers in the country, most of which reflect conservative views. Ordinary Koreans fully recognize that major media companies have maintained ties with the major governing parties and political establishment that go back to the country's post-war military dictatorships.

Fans Abroad

Oh is a former reporter at a magazine published by dissident journalists, and he concedes that his company probably won't rake in sizable profits going forward. "I want OhmyNews to be sustainable, but my ambition is to spread citizen journalism around the world, not to make money," he says. He's even willing to help journalists elsewhere set up OhmyNews copycats without any strings attached or licensing agreements. The company does have its fans abroad. OhmyNews secured $11 million in February from Softbank Corp. (which holds a controlling stake in Yahoo! Japan (YHOO)) to help boost its finances, set up operations abroad, and develop its international English language edition.

OhmyNews' English-language news division is produced by nearly 1,500 citizen reporters from more than 100 countries, plus five professional editors based in the U.S. and Korea. While the page is aimed at a global audience, its strength is in developing countries, where many people feel local views aren't fully reflected in Western media. Its Japanese-language version, the first joint venture overseas together with Softbank, hasn't really made any impact so far since its launch just two months ago.

Blogging Rivals

Critics say OhmyNews will have a hard time trying to repeat the sensation it sparked in Korea. It competes for the attention of Net users in increasingly crowded markets, many of which might not really crave its maverick style of journalism. Apart from social-networking sites and portals that are increasingly developing into important news distributors, the explosion of blogging worldwide will probably make a dedicated citizen-news site less attractive in the future.

Even in Korea, fierce competition for online advertisements is expected to push OhmyNews into the red this year, according to company executives. "In any industry, no business model is sustainable unless you constantly seek innovation to adapt to new changes,"says OhmyNews Communications Director Jean Min. He adds that his company will soon come up with a revamped version that befits the Web 2.0 era. One option under consideration is giving readers certain editorial rights, Min says, without offering further details.

OhmyNews execs say the biggest difference between blogs and their service is the role of professional journalists. Blogs don't have the credibility of OhmyNews, where professionals screen, edit, and fact-check stories from ordinary folks to filter out inaccuracies and potentially libelous claims, the company argues. Whether that kind of quality control will differentiate OhmyNews from competing sources of news and commentary remains to be seen. For the moment, though, the company remains long on idealism but short on a workable business strategy.

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