Two Media Startups and Not a Single Journalist in Site

Neither Seeking Alpha nor FTBpro has any reporters, but they both publish hundreds of articles a day and have millions of registered users.

Israeli content websites have been suffering a long slump: Google and Facebook are biting heavily into online advertising budgets, while ad agencies continue imposing heavy fees and newspapers shed jobs. Under such conditions, it wasn't surprising when the popular website Tapuz recently fetched just NIS 4.3 million.

But in the background, another breed of content sites is reaching wide audiences and receiving top-dollar valuations. While both Seeking Alpha, a website surveying corporate stocks, and FTBpro, which provides coverage of big league soccer, are both media companies, they are also startups. Both are financed by venture capital funds and valued in the tens of millions of dollars.

Although their product is quite similar to that of traditional content sites, neither company employs reporters: The content they carry is contributed by members of their viewing audience. None of the contributed material is paid for on FTBpro, while Seeking Alpha pays writers in certain instances.

The business models of both websites are based mainly on advertising. Seeking Alpha, the older of the two, has also begun selling premium subscriptions. Both maintain staffs for editing and layout.

FTBpro was established just two years ago, but its first round of funding – in which it raised $7.4 million from Battery Ventures and Gemini Israel Ventures – was executed at a company value of tens of millions of dollars. The company said it intends to use the money on expanding its coverage to leagues in France, Brazil, Turkey, and the U.S., as well as expanding its European coverage into the Asian market. It has also set its sights on attracting audiences in Russia and the Arab world. In 2011, the company raised $300,000 in seed money from Evergreen Venture Partners' Boaz Dinte and Erez Shachar.

The investment by the Battery and Gemini funds in a media outlet with an advertising-based business plan might seem questionable, considering the falling revenues at Israeli content sites. "In the end it all comes down to how much it costs to gain a user and how much he brings in," says Gemini's Yossi Sela, a member of the FTBpro board of directors. "The advertising model is a fantastic model, with costs lower than revenues. In our view, the investment in FTBpro is an investment in a technology company."

Unlike most Israeli content sites, FTBpro isn't targeted at Israelis, but at soccer fans throughout the world. Its coverage focuses on the UEFA Champions League, England's Premier League, Spain's La Liga, Italy's Serie A, and the German Bundesliga, with about 300 new articles appearing on the website each day in English, Spanish, Italian, and German from 1,000 listed writers.

FTBpro attracts 40 million visitors a month. Its mobile application, launched several months ago, has already registered 500,000 downloads. The website offers contributors the use of ready-made templates for displaying predictions of match outcomes, a video player, photo presentations, presentations of team members and player rankings.

"Unlike fan forums, we present visitors with analyses and articles from a large group of writers," explains FTBpro CEO Asaf Peled. "We allow every writer to create rankings, present player lineups that raise the level of content, and share the content on social media networks. About 80% of our traffic now comes from social networking."

Founded by Peled, along with chief technology officer Yuval Larom and product manager Gili Beiman, FTBpro employs a staff of 30 at its offices in the Neve Tzedek quarter of Tel Aviv. Around half the employees are involved in adapting the website to mobile platforms and developing new features. The others, mostly new immigrants making use of their mother tongues – English, German, Italian, Spanish and Portuguese – edit the content and administer the website. The large number of foreign language speakers in Israel has proven to be a competitive advantage for the company.

Some of the staff are apprentices, working in the context of arrangements between FTBpro and various programs for encouraging aliyah. Many of the writers are students in sports media programs and trying to gain exposure, while others are seasoned fans just looking for an audience. Content that's put up on the website can also reach media sites such as the Daily Mail, the Telegraph, and MSN-UK, which have syndication agreements with FTBpro.

"Our main competition now is from established media websites and we are trying to develop more and more bilateral content-sharing partnerships with sites around the world," says Peled. With its strong following throughout the world but lesser popularity in the U.S., soccer is one of the few fields where non-American global media companies have room to grow.

FTBpro recently signed an agreement with the Premier League's association of team managers, allowing selected writers to conduct video interviews with managers, such as Chelsea's Jose Mourinho and Arsenal's Arsene Wenger.

Unique content or replicable product?

Seeking Alpha, established in 2004, is a stock analysis website with over 7,000 contributing writers. It features about 250 articles daily and aggregates news through a model similar to that used by the Techmeme website. Having recently reached the milestone of one million registered users, Seeking Alpha is one the most popular stock analysis websites in the U.S., alongside MarketWatch, Yahoo Finance, and Fool.com.

The company employs 100 people, including 80 at its offices in Ra'anana, and has raised $15 million. Investors include Accel Partners, Benchmark Capital and DAG Ventures.

The website's key advantage - which has helped establish it as an important aid to traders and analysts - is the wide span of its coverage, including analysis of poorly-traded stocks.

As an incentive, Seeking Alpha offers selected contributors a differential scale of payments for reviewing stocks, with higher payments for less-widely-reviewed shares. The company first came out with the offer in January 2011. In July of that year, CEO David Jackson said the company intended paying contributors $1.2 million that year.

"Seeking Alpha introduced something that hadn't existed before: a platform enabling investors to express their opinions on stocks," explains Michael Eisenberg, a company director serving on behalf of Benchmark Capital. "The basic assumption was that at least some buyers of a stock hold a firm opinion on the company and its performance."

By turning to an audience of outside writers, the website can offer much wider and more comprehensive content that other sites like Yahoo Finance or the Wall Street Journal, explains Eisenberg.

"The issue, in my view, isn’t what the content actually deals with, but its uniqueness," says Eisenberg. "Unique content or replicable product – for me that's the main question. Another question is whether you have a cost advantage in gathering information. The third question is, when looking down the road – say five years ahead – if it's possible to conceive of other channels of monetization besides advertising."

According to Internet traffic information company Quantcast, Seeking Alpha has two million unique visitors in the U.S. each month and ranks among the top 1,000 websites in the country.

Eisenberg stresses that traffic volume isn't the company's main objective. "The targeted breakdown of visitors is much more important to us," he says. "If we'd wanted to attract more surfers we would ask the writers to write about Apple. Instead, it's more important that they offer unique content by reviewing less-widely-traded stocks. That's the uniqueness we create and that's what draws the right visitors."

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