Larry Schwartz of Newstex [LexBlog Q & A]
For today’s LexBlog Q & A, I conducted a phone interview with Larry Schwartz, president and co-founder of Newstex.
Newstex, a virtual company founded in 2004, offers a unique approach to aggregating news and full-text blog content. During our conversation, Larry talked about the business model behind Newstex, how the company has managed to make their service marketable, and more.
This post is a bit longer than our usual Q & A features (seven questions instead of five…I just couldn’t help myself). As a result, the duration of the interview is available after the jump.
1. Rob La Gatta: When you and Steve Ellis first founded the company back in 2004, what was your vision of where it would go?
Larry Schwartz: When we first started, we had just left another company called Comtex, which is a public company who was in the content space. We had been brought in there to turn that company around, and then had a falling out with the board over how to run the company.
We had left that and were getting out of the business, when customers and publishers came to us and said, “There’s a space here for you guys. you guys are pretty smart. Can you figure out how to put a company together that could feed news to us?” So we really started out trying to invent a better way to deliver syndicated news to financial markets in a real-time manner. It was very traditional, what we call an aggregation-model business. It had nothing to do with blogs (laughs).
2. Rob La Gatta: At what point did Newstex decide to add blogs and commentary to the real-time news feeds you syndicate?
Larry Schwartz: If you talk to anybody who blogs, they always have an interesting story of how they got started.
My interesting story is, my daughter is a horseback rider. At the barn where she rides horses, they needed a website, because everybody was complaining that they couldn’t see what was going on with the shows and [at] the barns. So I said, “Oh, I’ll do one.”
I had already been [exposed to] Moveable Type, so I set [it] up and created a little website – this is going back five years, six years – and started doing other blogs for other horse stuff. So really I was doing it through the horse side, and then I got into blogging and started reading a lot more and getting more involved. That’s when a light bulb went off, and I said, “You know, blogs are really commentary. And there’s a real market here for news, and [for] the people who comment on the news.” So we saw it as two separate products: the news product and the commentary.
That’s when we started signing up bloggers as publishers, and attempting to syndicate the content as commentary.
3. Rob La Gatta: Since adding blogs, have you found that they are on par with or more successful to market than traditional news?
Larry Schwartz: Well, the problem with news is [that] it has become a commodity. You can get your headlines pretty much anywhere nowadays, and you don’t really have to pay for it.
And people are hungry for opinion. [Look] on TV: we’ve got a lot of news channels, but why is Fox News number one? Because it’s really not news, it’s opinion; it’s commentary. It is sometimes pretty outrageous, and that’s what gets people to pay attention. So I think we’ve seen [that] we can sell the blogs as a product because it’s very unique, what we do (we’re the only ones who do it, that we’re aware of), and we can charge a premium for it because it’s pretty difficult [to do].
4. Rob La Gatta: In a world where people can subscribe to news feed or blogs for free using RSS readers like Google Reader, what are some compelling reasons for using a pay-based service likes Newstex?
Larry Schwartz: It’s the same in the [legal and] financial market: time is money. People don’t have time to go hunting through hundreds or thousands of blogs to find that one particular post that may be about the topic that they’re interested in, especially when you get into really detailed subjects (like on compliance, or health, medical, patents, etc).
We get very technical blogs that we syndicate. By bringing them into our system, we tag everything. We normalize it so everything is the same, and it makes it very easy to search. [For] financial markets, we actually stock-ticker the blog posts. So if you’re looking to read news about Apple Computers, you type in the stock ticker “APPL” and up pops not only the news, but the blog posts about Apple. What we basically do is we aggregate it and make it much easier and quicker to find information.
We also have an editorial team that reviews any blog we bring into our system, to make sure it’s up to a certain standard level. So you’re not going to get junk, which is a real important point. [On] a lot of the blog search engines, like Google or Technorati or whatever, I could put “Newstex” in as a search term, and half the stuff I get is spam blogs or junk blogs. So it’s really hard to find that needle in the haystack of information that you’re looking for. Which is true of anything: news, legal briefs, whatever…blogs just fit [the] same criteria.
5. Rob La Gatta:
How do you identify which blogs to include in your service? Do you go out and solicit bloggers, or do people come to you and say “we want to be included in this”?
Larry Schwartz: People do come to us through our website, where they can come and fill a form out, and we review those and see if there’s a good fit.
Most of the time, we’re going out and finding the blogs. We’re either looking at a category, because we think that’s a good category, or a clients hired us to pull blogs into that category. We’re doing a lot of work right now in politics, [for the] 2008 [election]…we’re picking up blogs, pretty much in every state, for all the different candidates. And we have a very systematic way we go out and do that. We’re trying to find the quality, the premium blogs in every topic. And that may be 10 to 100 blogs, [but] it’s certainly not thousands of blogs on that topic. We’re looking for the cream of the crop, the best of.
6. Rob La Gatta: So is this content delivered via RSS?
Larry Schwartz: No, we deliver to our clients – because the volume is so big – [using] what’s called FTP open socket, which is just a high speed protocol, and something called XML/NEWSML, which is a kind of higher end, [more] marketable language than RSS.
Because we have to be much more structured – we have a lot of extra data we send along, and our volume is so big – RSS couldn’t handle [it]. But when people send us their blog feeds, that’s all through RSS. Basically, all the blog[ger] has to do (besides sign a simple little contract with us, which is about three pages) is set up a full-text RSS feed, give us the URL to that full-text RSS feed, and they’re done. And then we send them a report every thirty days, with a check.
We have people who make thousands of dollars a month, and people who make ten cents a month. It really depends on what you’re blogging about, how much you blog, [and] the length of the post in terms of how well you do. People do it because they make money, and they do it because they get their brand into places they would never get their brand into, with traders, on Lexis, on library systems…it’s a whole other market that they’re just not tapping into through the open web.
We were just out at BlawgWorld in Las Vegas a month ago, and I gave a whole talk out there about this, and bloggers kept coming to me and saying, “People really would pay for this stuff?” And I said, “Yeah, because time is money.” I mean, if you’re a trader, you don’t have time to go scouring over the web, trying to find what the gossip is about Apple that may make the stocks move or go down. So they’ll pay for that.
7. Rob La Gatta: And you guys are the only people doing this at this point?
Larry Schwartz: We’re the only people who’ve done it, because, as you know, dealing with individual bloggers is very time consuming; you’ve got to have a lot of patience, and there’s a lot of handholding involved. We have over 2000 bloggers we’ve got contracts with right now.
Interested in hearing more? Check out some of our other featured guests…Larry is just the latest in our ongoing series of legal blog interviews for the LexBlog Q & A.