Among the e-commerce companies advertising in major markets, there is only one journalism-based site that doesn't want to sell you a damned thing: APBnews.com .
APB Online Inc., the first Internet company devoted to covering every aspect of the criminal justice system, is placing bets that no other content site has been willing -- or able -- to make. Company founder, Chairman and CEO Marshall Davidson, a Texas-born investment banker, believes he can mimic the strategy of a search engine/portal, or even a cable channel: Spend money on programming and infrastructure, advertise like crazy to build traffic and dominate a niche, and then figure out that money-making stuff later.
"In terms of business model, we are something like a single-genre cable network, [like] ESPN," Davidson said by e-mail. "These content and audience aggregators have multi-year cash burns as they build programming and audiences to create advertising and e-commerce platforms."
Davidson's wager is already huge: The company has raised an impressive $23.5 million in two rounds of private investment, hired more than 42 full-time editorial staff (including pedigree names such as Pulitzer Prize-winner Sydney Schanberg ... see sidebar), and signed more than 140 other reporters to freelance contracts.
APB Online's most interesting gamble may be its insistence that you can take traditional news coverage then expand a single genre that has no obvious commercial tie-in. Davidson and his partners like to compare APB to news companies such as Bloomberg, CNET and ESPN, but each of those have easily definable demographics for advertising, and buy-button potential for trading stocks, buying computers and ordering sports videos. How do you describe a diverse audience that enjoys reading about serial killers, or picking through fat FBI files on celebrities, or listening to live police scanners? And what do you sell them?
The company has taken generous advantage of the Web's infinite capacity by publishing gigantic reports on, for instance, the comparative safety of 1,497 college campuses, the varying theories about how women should fend off rapists, the graying of America's prisons and dozens of other topics. The company's deep coverage of a single topic means there is a full-time reporter covering only missing persons, and three computer-assisted reporters filing literally thousands of Freedom of Information Act requests to release files from government agencies.
In little over a year, APBnews.com has won 1.13 million unique U.S. users per month at home (according to October figures from PCData, which does not measure workplace or educational use), ranking it 390th overall at the time their multi-million dollar ad campaign kicked off. Every full-time staff member has stock options, no real competitor has mounted a challenge, and tech/biz authorities such as The Industry Standard are referring to APB's model as a 'Why didn't I think of that?' idea. It's no wonder the newsroom is feeling giddy.
"I've told the staff that we are headed for TWD -- total world domination in our genre in every medium in the U.S. and abroad," said Chief Operating Officer Mark Sauter, a former Inside Edition investigative reporter who co-founded the company with Davidson and investment banker Matthew Cohen. "We have a chance to become the popular authority and best-known media brand for our genre."
FROM O.J. TO SINATRA
Suitably enough, Davidson said the idea of creating a media company dedicated to crime came to him right after O.J. Simpson was arrested on charges of murdering his wife. At the time, Davidson was in Los Angeles restructuring a bank.
"For the next few days, many of the conversations I had with my co-workers ... involved them telling me about their experiences with the criminal justice system -- car thefts, jury duty, home break-ins, friends assaulted, complaints filed and not followed up, missing friends or relatives," Davidson said. "I was struck by the number of what were essentially consumer interactions between law-abiding citizens and the criminal justice system, most of which were unsatisfactory."
Davidson dreamed up a mission statement -- "To Inform and Serve" -- and roped in Sauter and Cohen to help build a cable TV network that would pursue this simple insight. By 1997, cable looked too expensive, so the group chose the cheapness, interactivity, boundless space and exploding popularity of the Internet.
"The concept was bold, ambitious, idealistic and a little crazy," said Sauter. "Perfect for me."
In August 1998, the business plan attracted $3.5 million of venture financing, and the trio was off and sprinting.
"[We] hired 24 professionals, wrote all the contracts, bought the technology, built the newsroom, designed the Web site and launched a five-program news Web site in 91 days," Davidson recalled.
To prospective staffers, Sauter had to describe an untried genre and a publication that didn't exist ("Call it a cross between the Washington Post, Dateline and Aviation Week -- with a little USA Today and Reader's Digest thrown in," he said), but he also had the sexy lure of Internet stock options.
"I hired many of our reporters over the Internet and in my local Starbucks, since we had no office (or business cards or track record)," Sauter said via e-mail. "Ironically ... many of the journalists did not understand exactly what an option was. Nowadays, some of them are quick to ask me tough questions about the financial markets and other factors involved in running the business side."
One of the first hires was Hoag Levins, who saw an ad APB submitted to Editor & Publisher while he was working there as founding editor of E&P's MediaINFO.com publication. Levins, who reported for the Philadelphia Daily News and the Philadelphia Inquirer before spending two years studying the online industry for E&P, was brought on as executive editor and vice president.
"It was quite a challenge: build the very kind of online newsroom you've been pontificating about in E&P publications," Levins said over e-mail.
A key tenet toward avoiding those mistakes was to go after experienced crime reporters who were "operating according to the standards of mainstream American journalism," Levins said.
"We started out with veteran print reporters, since we needed inverted-pyramid, AP-style stories to win distribution," said Sauter.
APB has spent considerable energy during its first year of existence stressing its reliability and "normalcy." Managers are fond of words like "broad-based" and "mainstream" to describe their coverage, and any discussion of staff includes a thorough listing of reassuring past places of employment, such as Reuters, AP, CBS, ABC and UPI. In October, Davidson took the time to write a letter of complaint to Newsweek after the magazine listed APB in a category of "wacky" websites. Journalism awards were pursued, and won -- APB was given the Society of Professional Journalists' Sigma Delta Chi online deadline reporting award for posting Frank Sinatra's entire FBI file, along with commentary and analysis, within a day of it being released.
By all accounts, the main office in Manhattan resembles nothing so much as ... a newspaper office.
"I was intrigued because it was a real newsroom," said Schanberg, who worked for the New York Times for 26 years and wrote the book upon which "The Killing Fields" was based. "There were 15 or 20 people, almost all of whom were from newspapers. ... [It's] filled with good spirit, and the people who raised money for it are not just interested in money, they're interested in content."
THE COPS FACTOR
"We cover," Levins said, "good cops and bad cops and everything in between."
That's not to say that APB's coverage is at all slanted; indeed, one recent "Behind the Badge" headline was "Jail Rocked by Sex, Drugs and Payoff Scandal," and the entire site is dotted with polls asking about police tactics, individual rights and media coverage.
Still, with a name that derives from the dispatcher phrase "all points bulletin," a masthead with a live police scanner button just below it on every page, and a video center showing high-speed car chases, there is a delicate balance between high-minded public-service reporting and pro-enforcement voyeurism.
"We have taken some actions to clarify our identity better," Levins said. "We originally had a logo that featured a star-shaped badge. We changed that to our current logo. Initially, most of our site graphics had police icons in them. We changed those some time ago."
Some of the more interesting features on the site are, paradoxically, the most difficult to find. Every week, for instance, editors throw up the latest installment of the "G-Files" -- the fruit of having more than 3,000 FOIA requests pending ("Probably more than the networks, New York Times and [Washington] Post combined," Sauter says). Whole FBI files and commentary are presented on scores of notable figures, from Vince Foster to Ernest Hemingway to Ted Bundy to the Grateful Dead.
But unless the current findings are posted on the site's front page, readers have to either scroll down to the lone "G-Files" mention on the page, conduct a search, or know enough to click on the "Media and Entertainment" channel to find it.
With 42 reporters and 140 stringers cranking out stories and plowing through databases, and with a commitment to posting the latest breaking Associated Press crime stories (frequently, the top three articles on the home page are from the AP), APB faces a significant daily design challenge.
"They have all these reporters, but to me -- maybe I'm missing the point, but I don't really see the stories they're breaking," said erstwhile competitor William Bastone, a Village Voice reporter who publishes The Smoking Gun, a 2-and-a-half-year old site that posts frequently humorous scanned-in documents it obtains from courts and government agencies.
Still, the exact same front-page play that's given to APB's Campus Safety package is also bestowed on more abstracted interpretations of "criminal justice and safety," such as a review of the latest James Bond movie. Any crime-related book, TV show, video game, website or movie (including "Fight Club" and "Analyze This") is a candidate for review.
APB's approach to its own information glut and diverse appeal is to post the eight channels on each page, and to offer personalization features (which are, especially when compared to the rest of the site, laborious to use).
"Remember," Sauter says, "each of our channels and programs is designed for specific audiences. Those interested in weighty policy issues need not be bothered with celebrity news or movies reviews -- except if they want to sneak a peek."
THE CONTENT NOSEDIVE
This summer, Davidson & co. raised an additional $20 million, brokered by the investment bank BancBoston Robertson Stephens. That means that APB Online has raised almost as much money ($23.5 million) before going public that Salon.com raised through its Initial Public Offering ($26 million).
The new money is being used to accelerate the hiring boom, fund operations, and launch the ad campaign (whose billings have been estimated at between $10-20 million, though Davidson wouldn't comment on the figures). An IPO will definitely be needed, both to pay for the "multi-year cash burns," and to give employees value for their stock options.
But 1999 has been an atrocious year for Internet content stocks. Salon's share price is down 30% since its June debut (compared to the NASDAQ index's 30% gain), MarketWatch.com has lost around 50% since its early-year debut (after which NASDAQ increased 45%), and TheStreet.com has plummeted an astonishing 70 percent since May (against NASDAQ's 35%).
"All in all, it's a painful lesson indeed for anyone who thinks a high quality editorial product is reason enough to invest in an Internet IPO," wrote the New York Observer's stock analyst Christopher Byron on Nov. 11. "If theStreet.com is any guide, the better the product, the worse the investment."
Still, APB's founders are upbeat, doling out stock option bonuses to reporters doing stellar work.
Davidson thinks his "vertical portal" (or "vortal") model will be used to carve out other chunks off what used to be the domain of daily newspapers.
"I think multi-layered and complex subjects such as business, medical care, science and crime/justice/safety are best covered by specialty news organizations," he said.
When such organizations are created, it will be hard to imagine them coming so far in their first year of publishing as APB Online.
"We ... expected to have a slow build toward that magic day, 18 or 24 months away, when we'd count our page views in the millions per month," Levins said. "That actually happened last summer and we have been scrambling and adding additional servers ever since."
APBNews.com -- useful idea, or out of touch?