Gawker’s Nick Denton says Gizmodo made no direct revenue from leaked iPhone post

Since Gizmodo penetrated Apple’s impenetrable fortress and posted videos and pictures of a not-yet-released iPhone earlier this week, the post has received 7,861,004 views, made it to the front page of Digg, been linked to by thousands of blogs, and retweeted over 30,000 times. A follow-up post detailing how the iPhone prototype had been lost received over 2 million views and saw similar ubiquitous coverage. Given that Gawker Media charges about $10 CPM, then one would think the media company raked in somewhere in the neighborhood of $100,000 in advertising, making the $5,000 Gawker-owner Nick Denton reportedly paid to get his hands on the found (stolen?) iPhone well worth it.

But at a recent Paid Content event, Denton said that the scoop brought “”no immediate revenue benefits whatsoever,” and that instead it garnered “hundreds of thousands of dollars worth of publicity for the site.”

After reading this I emailed Denton asking him to confirm the no-direct-revenue claim and explain why the high page views didn’t result in more advertising dough.

“Internet advertising is sold a few weeks ahead of time,” he wrote back. “So you might guarantee 2m impressions at $10 per thousand, for instance. If you get 4m impressions, you can’t go back to the advertiser and renegotiate. It’s either a bonus to the advertiser or wastage.”

This speaks to a larger issue that many online publishers have been complaining about: websites have a hard time cashing in on huge traffic spikes because it’s extremely hard to turn that into revenue. This is why surges of readers from places like Digg are sometimes referred to as “throwaway traffic.”

But obviously there must be some benefit to those new readers, most of whom won’t be coming back, or else Denton wouldn’t have forked over $5,000 to get them. So why did he pay so much?

“Because some of those new visitors will return.”

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  1. Mike cann Says:

    Nice post Simon, I wasnt aware that was how these large sites negotiated thier contracts, you would hope tho that once they had reached thier 2mill hits quota they would change thier advertising over to something else for the spike such as AdWords…

  2. Michael SteelWolf Says:

    It’s important to realize that “cashing in” on every visitor isn’t the point, something Denton seems to (at least partially) realize. Calling visitor spikes “throwaway traffic” simply because they can’t be exchanged 1:1 for dollars is shortsighted. As Denton said, it’s all about building publicity and credibility, making every visitor important.

    It’s unfortunate, though, that Denton can’t seem to see beyond advertising “impressions” elsewhere with his business. His recent push to get visitors to “click through” from Gawker subsidiary RSS feeds is only one step away from the idea of “throwaway traffic.” Visitors and customers are not dollar signs, they are people to be courted and respected. The organizations that realize this stand to do quite well in the next few years.

  3. SayUncle » Blogging Revenue Says:

    [...] An interesting take. The big leaked iPhone post generated tons of hits and traffic. Yet no real money. [...]

  4. Bloggasm » Editors from LA Times, Salon, CrunchGear, Hot Air, and Mediaite weigh in on Gizmodo police search Says:

    [...] Gizmodo had purchased a “stolen” next-gen iPhone, one it then flaunted to the tune of millions of pageviews, police raided Gizmodo editor Jason Chen’s home on Friday, confiscating four computers, two [...]

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