The Digital Skeptic: Security Site Makes Money, But Brings SWAT to the Door

NEW YORK ( TheStreet) -- Brian Krebs had an interesting conversation in his suburban Washington, D.C., driveway last month.

"I just happened to open the front door and there was a full SWAT team with pistols, rifles and shotguns drawn," Krebs, author of security blog, told me. "I said, 'You guys are getting tricked. There is no emergency.'"

Krebs had just finished filing a deep investigative piece exposing an identity-theft ring called, which trades in personal information stolen from the likes of first lady Michelle Obama and the director of the FBI.

Krebs says those behind retaliated with a Web attack on his site and a false alarm that brought a heavily armed police force to his home.

Investors should expect the multi-award-winning Krebs, who has 14 years experience as an investigative reporter at The Washington Post, to be just another big-time Beltway journalist with another big-time Beltway job.

Save for one fact: Krebs works for no man.

Three and a half years ago, this passionate security writer grew tired of consolidation in the Post newsroom and accepted an exit package. Two days before he was to leave, he began his new life as owner and sole content creator of

And six months later it became how he made his living.

"I would be disingenuous of me to say that I don't miss being from The Washington Post and having it open doors," he told me. "But I don't miss much else."

Even more remarkably, in a business where successful Web writers suffer through grueling production schedule of five stories a day (at least), Krebs considers it a lot to create five stories a week.

"The type of reporting I do is very time-consuming," he said. "But I have the luxury of spending that time and still paying the bills."

It's a living that violates every supposedly ironclad rule of new media.

His traffic is tiny by modern Web standards: 350,000 to 500,000 unique visitors a month. And he engages in none of the modern Internet marketing chicanery. There is no Google ( GOOG) Ad revenue to speak of. No laborious headline tinkering to grab search engine traffic. No sophisticated social media strategy. No free contributor networks. There is no pay-per-click foolishness or complex traffic swaps, or link agreements or ad popups or word tie-ins or mobile apps or planned Google Glass feeds.

All Krebs does to pay his bills is charge for -- get ready for it, Web media hipsters -- banner ads. Advertisers, mostly from security companies such as Campbell Calif.-based IronKey, Bethel Park, Pa.-based Malcovery and Chicago-based Authentify pay a premium over junk Web traffic rates to share their brand with his.

"My annual marketing budget is few hundred thousand a year," said John Zurawski, in charge of marketing for Authentify.

Zurawski places ads in most of the major financial services brands, including Bank Technology News. "But Brian's site is by far the No. 1 referral engine we get," he said.

When I asked if banners ads were too simplistic a marketing tool in the age of big data, he bristled.

"I dont need a demographic report from Brian Krebs to understand that when he interviews a Russian hacker, he is going to attract interest," Zurawski said. "No one has that story."

And those close to new media say Krebs' model of serving a tight niche and keeping costs down is progress in a world where investigative reporting struggles with bloated expenses.

"I think what Brian is doing is refreshing," says Chas Edwards, a media entrepreneur who co-founded blog advertising network Federated Media. "The news business is stuck in a mindset where great investigative reporting has to cost $10 million year. Krebs shows that great work can get done with low costs."

Krebs declined to share specifics on his revenues, other than to say he does most of his own reporting and editing and that his standard of living is about the same as a reporter working at the Post.

"And I can do things I could not do before," he said, "Such as travel the world and give speeches about topics I am very passionate about."

Considering media giants such as AOL ( AOL) consider 8% net margins progress and Krebs keeps most every dime he makes, I think it's a safe to guess that from a net earnings perspective, Krebs is crushing the brands at The Huffington Post.

When I asked if his approach might be an answer for a media business struggling in a declining age, Krebs was optimistic.

"I have been trying to corrupt my colleagues to go out their own," he said. "As long as you find topics people want to read about, and offer something they cannot get anywhere else, I think those niches are everywhere."
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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