JEECamp Notes: Kyle McRae and the rise and fall of Scoopt

Kyle McRae, founder of Scoopt, talks about the creation of a business based on UGC, its sale to Getty and it’s eventual demise two years later.

Warning: These are rough notes, taken by me, for me at today’s JEECamp in Birmingham. This means there are typos and misspellings aplenty.

Kyle McRae – Scoopt


Asian Tsunami pictures taking two to three days to get onto CNN.

Realised need to connect people with news agencies.

Created – consumer facing, don’t sell to The Sun you’ll get shafted. We negotiated money and split it 50/50

Total website cost £5,000 to build (had quotes of £50,000).

(Probably do it for half that these days)

Taking the plunge was the hardest – how much of personal time, effort commitment should I put in?

Put in everything. Sold house, moved down to the south from Glasgow, wife gave up her job and dedicated ourselves wholesale.

If starting new business critical decision is whether to launch without funding.

Soft launch saw three VCs approached him from Silicon Valley and wasted a lot of time having nice chats with investors.

Best thing with Scoopt was to launch it first and see how it goes.

Ideal world get your project funded first.

Longer you take over it though, the dodgier it gets.

Key thing is making the business the best it possibly can be. Managing consumers’ expectations was key. Can’t tell people their photos are crap.

We focused on revenue – all about selling pics and videos.

Advice was to go for critical mass and go for the network and worry about selling later.

If you are building a business it needs to be selling something – more so now than ever. VCs are going to look at your revenue model first.

Focus entirely on where the money is coming from.

Pulled together bunch of very experienced and useful people to turn it into a realistic business.

I didn’t have much idea of business, just journalism. Needed experience from people who had already built business. Was tremendously advantageous.

Before you launch anything – sanity check it.

There are experienced people out there who can do that. You should listen to them.

Problem with Scoopt was that it doesn’t scale. Most important one was the sales side of things. We found it easy to build a network of thousands of contributors. First problem was filtering it. But the impossible side of it was selling things on to the media.

Anything less than a nationally important story it was impossible to get the reach into the regional and hyper local level.

This came out painfully in every pitch I made to VCs. I had £10mill revenue in year 2 but in order to make things happen it didn’t add.

By middle of 2006 we realized it wasn’t going o fly.

We decided we had to sell it. Forecast for Yr 1 was £30,000. It wasn’t making real money but with sales and distribution network in place it could work.

Drew up fantastic business plan, told a brilliant story, but nobody bought it.

Went through some early due diligence with Getty. We left that meeting thinking they might buy it, but a day after they said it didn’t make sense for them.

I’d lost faith in the business model. Options were to grind on, or stop.

One book you should buy is The Dip. You have to know when to stop and move on.

Latter half of 2006 we were grinding on and had enough faith if we could bring it up to a certain level it would have to be of interest to a Getty or Reuters.

We were the first in the market and similar businesses were starting to set up.

Had some successes – a few front pages.

Times and Glasgow Herald. When pitching VC that looks good.

Reality of the Times sale was they paid £300. The Herald paid £75, but wanted to pay £25.

Pic Desk guy at herald had a daily budget of £250.

Realised budget wasn’t there.

December 2006 driving home

I sent Jonathan Klein CEO of Getty images a message from Blackberry admitting we couldn’t make a go of it without funding and said we wouldn’t be there in a month.

He said don’t do anything rushed.

Met with people in Munich and they agreed they would buy it. Wouldn’t say how much. They talked strong game of what they could do with Scoopt. Scoopt would just be another supplier along with hundreds of photographers. Woollier about the marketing campaign.

Knew we would be shafted on price, but Scoopt would survive.

Decided to sell.

Took Getty 3 months of due diligence before they signed. Could have been done in an afternoon.

During which all I could do was drop the ball.

Did Newsnight and CNN interviews thinking “why am I promoting this, all I can do is screw this out”

Got out on the other side. As part of the acquisition I became part of Getty’s citizen media. We’d asked for minimum staff of six. Realised that wasn’t going to happen – it was just myself and my wife. Just the two of us, but we were still getting paid.

People presumed I was a millionaire.

All the talk about what Getty was going to do didn’t happen. Scoopt stagnated. In terms of acquisition it was a one off fee, no targets. Not particularly incentivized to make a success, but it was my baby and wanted to prove it could work.

The inertia from Getty was very frustrating.

I don’t know why.

If you’re cynical you could say they bought Scoopt to seal up the citizen journalism market. All our competitors went bust.

Once Getty had a piece of the action it didn’t make sense for anyone to compete with them.

Istockphoto bought for $50 million by Getty in order to control the space.

Another argument is that Getty didn’t know what to do with it, but wasn’t going to throw any funds with it. It was going through financial turmoil itself. Picture market had dropped, share prices had dropped.

Getty had to put itself onto the market just to survive. Sold to private equity for $2.2billion

In the end Kyle left on the first day he could when his contact came to an end.

Self-assessment a few months before I explained where the company had gone wrong, that the business still had potential and Getty were squandering.

Left not exactly on best speaking terms.

Carried on with a staff of zero and kept it going for a year and pulled the plug on it this March (two years after business sold).

No real competitors did anything special in this space during the past 2 years. Even the big boys, no one got further than Scoopt. Maybe fundamentally the business doesn’t’ work.

Must be some way of using amateur citizen journalism content and making money out of it, but Getty didn’t figure it out.

Personal lessons:

All about the dip moment.

Grind on or get out?

Enormously frustrating. Running the business was fantastic. One of the most controversial bits of content was a stolen royal family video. Prince Andrew made it for Beatrice’s 18th Birthday. Lots of nice stuff. They had a party at Westminster and rented DVD equipment and left

Obvious and gross break of privacy (before we sold to Getty).

That could’ve been a big money spinner. The obvious candidate was the News of the World but one of their journalists was locked up for phone tapping.

The Sunday papers’ lawyers said no.

Advised him not to approach the papers personally, but he did.

Sunday People exposed him as a squalid rat, got DVD off him and sent it back to the Royal Family making them out to be the heroes. Got a double page spread on it.

There’s an argument to say anyone here thinking of starting a business, I think it pays dividends to escape the echo chamber and think about what you’re doing form a distance.

Being plugged into the industry and reading blogs is not the best way to do it.

Need to take a step away. Remove yourself form the scene for a bit; stop reading Jeff Jarvis and the other pundits. Ask if they really know anything or do you need to work out something by yourself from scratch.

If you can do it without funding, it’s the best way to do it.

Q: Where did the £10 million revenue prediction come from? Extrapolation from how many pictures we got on the percentage we could sell (5%) and we knew average price.

Spent a year in discussion with Flickr. No route to market so pitched route to market as commercial partner can if they want nominate Scoopt as a commercial broker.

Stuart Butterworth? Got pushed down to biz development in the end Yahoo thought it detracted from core proposition.

Partnered with CC that had a commercial license for those who want it. Had it working. Flickr wouldn’t do it.

In the end I did an open letter to Flickr members tagging it Scoopt and we’ll try and sell it.

30,000 pictures tagged and Flickr sent us some very angry emails.

Since then Getty has partnered with them and there is a group – halfway house.

BBC UGC Hub robbed us of revenue; The Telegraph even used our strap line.

When people got our message they tended to buy into it, but more people know the BBC and understand how to get into them.

£10daily budget on Google ad words. Now I would call the marketing we did social media marketing. Talked to people in Flickr and photography and journalism email lists. The key thing was engaging with professional photographers first who at first thought we were out to take their business. In every blog comment, email or forum discussion I made of point of engaging with people who thought we were the devil.

We also got into mobile phone forums, subtly spreading the idea that with a camera they could make a few hundred dollars.

Thoughts on running a live blog on a national news website

I have been lucky enough to be involved in many interesting projects since arriving at The Times, but I think the G20 Live Blog is the one that gave me the biggest adrenelin rush.

Running over the two days of the G20, it was like no other live blog I have been involved with. Four journalists were filing pictures and texts to the CoverItLive blog through Twitter and we had comments from tens of thousands of readers.

It was primarily run by web development editor Lucia Adams, my counterpart on news (I’m on business).

That meant that as well as being a contact point for reporters and responsible for answering readers’ questions, she was also moderating comments.

It was a pretty full-on task.  I tried to help out by offering up a few helpful links when and where I could and, if Lucia needed to step away from the computer, I would take over moderation.

Moderating a Times Online live blog is a task verging on insane. Comments are pouring in – at some points in their hundreds in a minute – and one person is responsible for allowing them on to the site.

You have to check that the comment is legally ok and that it is not offensive and inciting violence – that’s standard. But, in addition, we had a large number of comments that looked like protestors sending coded messages to each other. If anyone knows who the “Rofchester Crew” are, please let me know. Those had to be moderated too.

Yet, even after removing all these comments there were still too many coming through to get them all up on the blog. We did explain to those commenters convinced Rupert Murdoch was blocking their comments that there was a moderation process and that we weren’t able to publish everything because of the volume.

But what was the decision process behind the ones that did get on screen?

At the time, I didn’t really think about it. It wasn’t until Lucia and I started planning a talk on the subject for last week’s Social Media Camp, London, did we realise we had been applying our own unique criteria for what would get published.

This was what we were both doing:

Me: if it’s longer than a sentence, it goes in.

My justification: If someone has posted a few words, it’s unlikely to be adding anything particularly well considered and, very often, it was more likely to be abusive. Therefore, with very little time to dedicate to reading and approving comments I chose to spend my time on the ones that came in sentences.

Lucia: if the comment is adding something new, it goes in.

Her justification: Lucia decided to put the reader before the contributor. Very often different commenters would repeat the same point (“why don’t these protesters help the economy by getting jobs”, “I bet the taxpayers are going to have to pay to repair the RBS bank’s windows now, why didn’t they board them up?”). If a reader came to a live blog that was just a stream of comments all repeating the same point, it was unlikely to encourage them that the live blog had any value.

In Lucia’s mind, the role of live blog as a public service – answering questions on traffic disruption, providing latest information from the police, reporting on G20 developments, etc – was paramount. Therefore, she chose to publish those comments that best fitted that.

Who was right? I’m not sure there is a definitive answer. Certainly when we talked it though with others at SMC London, there was understanding for both points of view.

I guess part of it is about how you see the live blog. Is it primarily an editorial tool (live updates and information of the G20 as it happens), or is it a forum (where commenters are free to say whatever they like about a subject, within the law)?

One thing I found particularly fascinating was that, in the 48 hours of running the blog, we built up what we named a “flash community”.

People that enjoyed the live blog stayed and started to help us answer questions from other commenters. As this community solidified, the quality of comments improved and moderation became easier. At one point one commenter was helping Lucia to transcribe the G20 Summit speeches.

Perhaps community is too strong a word for what happened, but I like the idea that such blogs can encourage collaboration. It’s something I would like to build up with live blogs I do in the future.

An interview with an anonymous blog commenter

One of the problems with the online space is the perception of distance and anonymity that it creates. It means that people often say things in ways that are harsher than they would in real life.

But do they even realise they are coming across that way? I’ve always wondered what the people behind the spikey comments on our blogs are like.

Richard regularly comments on The Birmingham Post blogs under the pseudonym “Clifford” and, it is fair to say, has developed quite a bit of a reputation as a curmudgeon. But, despite his criticisms of The Post, he has stuck with us even when we didn’t quite get things right.

For that reason I wanted to meet him and, I have to admit with some considerable trepidation, I invited him for a tour of our offices.

The man I met in reception could not have been further from what I expected – polite, erudite, passionate and engaged in local news. For his part, he was oblivious to the image he had been portraying to others online.

Of course the wider point is that those who engage on the internet need to remember there are humans behind the handles (or bylines) and try and think about how their comments might be taken.

However, I don’t see internet arcadia arriving any time soon, so I think it’s worth journalists seeing that not all aggressive commenters are always aware how they are coming across. It is not always personal.

Whilst with us at The Post, Richard kindly agreed to go on video and talk frankly about why he commented on the blogs and how he’d want to see the newspaper develop in the future.

Richard has also told me he is considering retiring Clifford and in future wants to comment online as himself.

In total the two videos come in at around 15 minutes long. I haven’t edited them much, as so much of what Richard said interested me and I wanted to keep it for future reference!

However, if you want to jump to a particular point, here is a guide:

Video 1 (above):
00:36: On how his comments were percieved by journalists.
01:53: On pseudonyms and putting personal details online.
04:48: On political coverage in The Birmingham Post.
05:49: On the development of
07:00: On the need for web-first publishing (and why it won’t affect newspaper sales).

Video 2 (below):
00:19: Why scale is important in making a blog feel like a community.
01:36: What makes someone comment on a blog.
02:40: What blogs would work best on a newspaper website.
03:20: Why journalists should try and engage on blogs and not worry about bad comments.
05:42: On revitalising the blogs

Beyond the parasitic news model (and why Kindle won’t save us either)

So it’s 2009 and the search for a sustainable online newspaper business continues.

Even Google hasn’t quite worked out how traditional newspapers safely navigate past the Rusbridger Cross to emerge as businesses that generates most of their revenue from online operations.

The problem: print commands much higher premiums for advertising then the web does.

In order to compensate for that, web businesses either need to significantly scale up output, or significantly cut back on costs.

Currently one common solution espoused by those immersed in online business is to find someone else to worry about most of the costs for you.

The thinking is thus: the web is already awash with stories produced by other news orgainsations and these can be used as a free resource.

With a bit of repurposing and organising by a small team of copy editors, stories can be presented as an entirely new, high-volume, comprehensive news service.

It’s a smart model – one that could also disrupt the many news aggregation subscription services that exist.

You could also argue that, by combining stories from many sources, better organising them or by integrating social media, these news businesses are occupying a space that could/should have been filled by newspapers a long time ago.

But I still can’t see how their businesses can be sustainable in the long term. By relying on the mainstream media to produce their information in the first place,  they are tying themselves into the very business model they claim to be replacing.

If the mainstream media fails, these new businesses fail with it.

Mainstream media provides a volume of news online that is yet to have an equivalent.

I know it’s not a popular argument to make, but I’m afraid no other online content (as it currently stands) will cut it as a replacement. (If you don’t believe me, ask Eric Schmidt.)

Think about it: how many websites would you have to trawl through a day to find as many celebrity gossip stories as you would get from the combined feeds of The Sun, The Daily Star and The Mirror?

More scarily, how many websites would you have to trawl through a day to find an equivalent volume of quality business news that you get from The Financial Times feed?

An alternative theory is that the news industry needs to learn from the music industry and to replicate  iTunes or create some other form of paid-for model.

I’m not so sure that works either.

I agree that there is much we can learn from the music industry (that lawsuits and protectionist attitudes won’t save you – for example),  but I think there are also very distinct differences.

For example, when consumers download music off the internet for free, they pretty much know they are doing it illegally. The large record companies are not putting out their content for free on their own websites and there is no official Google Music.

We also do not have a market where consumers understand they have to invest in electronic devices for the purpose of accessing print content. This, in my opinion, is why the Amazon Kindle is unlikely to be the answer to the newspaper industry’s woes.

Perhaps a more fruitful investigation would be into developing paid-for products and services that reuse content or closely ally to the media brand.

Quick, incoherent thought #3: “ambient” distribution

Just been reading a post by Jonathan Kay that suggests the two biggest factors in the decline of print are the death of spare time and the death of community (thanks to Markmedia for the link).

The former struck a chord with me. I am a Radio 4 addict because I can listen to it while I’m doing other things (cleaning the house, commuting to work). I pick up the headlines whilst doing other things.

If time is becoming increasingly squeezed then I suspect the reasons behind someone dedicating half-an-hour of their time to reading a newspaper have to been even more compelling. Being on public transport and having a paper available for free is one of those reasons.

Even if the newspaper is a great product, with fantastic stories, it may not be something that fits into a person’s life easily.

So, when we look at how we can use technology to appeal to new audiences, perhaps we should be thinking media in terms of how much of a person’s time they consume.

Would the ideal be to make distribution ambient? This would mean stories would come to a person because they were part of their surroundings, rather than because they expressly decided to sit down and consume news.

The market and the internet don’t care if you make money

I think, from feedback I have received beyond this blog, that there is some confusion with regards to the importance I attach to journalism.

I want to clear this up now. I think a free press is massively important as a tool to help preserve democracy and to keep people informed about issues that they feel are relevant to their lives. My concern is finding ways to fund journalists in the future.

The thing is the act of journalism and the business that sustains it are two different things.

The business aspect has occupied my thoughts because I may care about journalism, but that doesn’t mean the market does. It is this point that has been put across very eloquently by Scott Karp of Publishing 2.0:

The web is the most disruptive force in the history of media, by many orders of magnitude, destroying every assumption on which traditional media businesses are based.

But the market should care, you say. What would happen if we didn’t have the newspapers playing their Fourth Estate watch dog role?

Here’s the bitter truth — the feared loss of civic value is not the basis for a BUSINESS.

The problem with the newspaper industry, as with the music industry before it, is the sense of ENTITLEMENT. What we do is valuable. Therefore we have the right to make money.

Nobody has the right to a business model.

Ask not what the market can do for you, but what you can do for the market.

This is the best analysis and assessment of the disruptive nature of digital that I have seen yet.

What is journalism and is it really that essential?

This is a comment I wrote for an earlier post about the role of journalists. I hope you don’t mind but I’ve copied it into a post because it is actually longer than most things I write and  the debate is moving on. Let me know what you think!

I think one of the things that seems to be misunderstood between commenters is the thorny issue of the importance of journalism.

I think there are two areas that need to be unwoven in this debate:

One is making sure we understand what we mean when we talk about journalism.

The second is making sure when we talk about journalism being essential, we understand what we think it is essential for.

OK, so trying to define journalism is an essay in itself and I know I’m going to fall far short with this attempt, but here goes:

Journalism seems to be a catch-all for many types of writing that is triggered by current or relevant events.

Continue reading

Newspaper brands – “crucial as records of facts”?

I just wanted to quickly and shamelessly point out again that a rather fantastic debate has broken out underneath my post about how most news doesn’t need journalism.

It has prompted a very considered and interesting comment from Steve Dyson – editor of the Birmingham Mail and the Sunday Mercury.

An extract:

Local newspaper brands have great reputations for reporting trusted facts. Let’s not dilute this too quickly without knowing what we’re diluting it with. Yes, add interaction, online and in print, but let’s clearly label what is what.

There is more, including comments disagreeing with his stance.