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Rue89: “Advertising is out of reach”

August 29th, 2008

Pierre Haski is one of the founding members of Rue89, a French news website.

15 months after launching, the site boasts 600,000 unique visitors a month (Nielsen’s figure, their Analytics accounts records over 1 million connections) and a turnover of 400,000 €. They expect to break even in 2010.

More background info on Rue89 can be found on the Editor’s Weblog.

So, tell us, Pierre, How do you make money out of this?

What business plan?

Rue89’s founders all come from Libération, France’s leading left-of-center daily, the books of which are now redder than its ideals. After several years of blogging, all were sensing a need for a new kind of journalism on the web. “News in its current format is heading into a wall,” they thought. So they asked themselves these questions:

• What do we want to do?
• What’s the essence of our project?
• What do we need?
• What does the French public need?

Once they had a project written out - notice how far down the list consumer demand appears- they started thinking about making money. Like any promising start-up, their business plan didn’t expand beyond an Excel file. They only knew that a paywall was out of the question.

Initial funding came from the founders’ severance pay and from friends. It was completed by a second round of financing in June (€1.1m/$1.6m/£900k).

What revenues?

Contrary to their predictions, Rue89 doesn’t live off advertising. The cash flows from 4 sources:

1.      Website development

Website development makes up roughly 50% of Rue89’s revenues. It came by chance. A left-of-center newsmagazine asked for them to develop a culture-oriented, collaborative website. Rue89’s having produced one of the most serious Drupal sites in France; they had a concrete experience to offer (although none of the founder is a techie himself).

A few months after they themselves launched, they opened Bibliobs. For a rival company. Not a smart move, they thought, “we won’t do it again”.

They are now trying to structure their website development solutions and to target NGOs or local administrations instead of other media companies. Clients are still coming by word-of-mouth, but Rue89 is thinking about hiring salespeople and putting more developers on such tasks.

2.       Advertising

The ad money is “out of reach” for a mid-sized player such as Rue89 and “it’s unclear if it will be in the future”. Display represents 80% of ad revenues, while AdSense brings in the rest.

What’s more, the current economic situation offers a bleak perspective, CPM-wise. All in all, Rue89 is happy that its business plan didn’t materialize and glad to keep advertising as a secondary source of income, at least in the mid-term.

3.      Third-party services

Pierre Haski says Rue89 has had many offers from classifieds or social services websites. The idea is to offer them a page on Rue89 where they can install their service (under a white label, i.e. under Rue89’s brand) and share the revenue. Nothing has been decided yet but a feasibility study is in progress.

4.       The tip jar

Several users have approached Rue89 staff to offer donations. But under the French law, a private company cannot accept them. They are currently dealing with these legal issues and will soon launch a module very similar to the Million Dollar Homepage. Visitors will be able to buy a cobblestone of the Rue89 (Rue is French for Street).

The money will be used for special actions, such as financing an expensive investigation.

What perspectives?

Although Haski seems satisfied with Rue89’s progresses since the launch, he realizes that the brand lacks depth. “Users see the homepage and that’s it”, he says. Categories as they are now built are unable to provide true niche content.

What is now planned is a “Rue89 universe” where the brand acts as an umbrella over a multitude of websites. A localized spinoff has already been launched in Marseilles. Traffic from this city went over the roof after a few weeks (a 300% increase, admittedly from a very low starting-point). The next project is Eco89, covering the economy, due to launch in 3 weeks.

With both side projects, Rue89 hopes to tap into regional and specialized advertisers. They know that there is a lack of qualitative ad inventory and try to offer compelling solutions to advertisers, working hand-in-hand with their ad network.

Interview by Nicolas Kayser-Bril

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Entry Filed under: entrepreneurship, france, onlinejournalism, web2.0