Hachette spies a good match with a digital duo

Neil Wilkes was just 16 and still at school when he started an internet mail-out dedicated to what was then the brave new world of digital television.

He may have been working from his bedroom, but it soon became clear that Wilkes was not alone in his interest in all things multi-channel, as his site developed a loyal following. Eight years on, Wilkes and his business partner James Welsh have sold their website Digital Spy to magazine company Hachette, for an undisclosed, but "significant" sum.

Both aged 24, they will continue to run the site, but now with the backing of a big media company with expertise in advertising sales and marketing.

For Hachette, Digital Spy fits well into a burgeoning digital portfolio, which includes the teen site Sugarscape and Elle.com.

Kevin Hand, chairman of Hachette Filipacchi UK, and a former Emap chief executive, explains that the company had been looking to make a digital acquisition for 12 months when it decided to buy Digital Spy.

He was convinced by the staff of Inside Soap magazine, another Hachette title, who "kept nagging and said, 'why don't you go and buy Digital Spy?'".

When Hand organised a party to celebrate a quarterly review of the business, he invited the Digital Spy team and "within five minutes the soap teams and them were like old friends".

"They're both obsessed by entertainment and television. After half an hour, you couldn't tell which was which, they got on really famously," he adds.

So what exactly is Digital Spy, and why is it so successful? From its early incarnation as an online arena to discuss digital television, it has expanded to cover the entire entertainment world. Throughout the day, there are breaking-news updates under the subheadings "entertainment" – including showbiz, music, television, movies, soaps, reality TV, gaming, cult and gay issues – and "media" – comprising broadcasting, digital TV and US TV – as well as quizzes and consumer technology reviews of gadgets.

One of the main attractions is the Digital Spy forums, which have 3.1m members, including Sir Alan Sugar (who mainly posts on technology).

When the summer months arrive, bringing with them Big Brother, Digital Spy's busiest period begins. The number of people working on the site doubles, with a dedicated team providing blow by blow updates from the show's 24-hour live feed. It is taken so seriously that if the makers of Big Brother spot something causing a stir on the Digital Spy message-boards, they will often ask producers to look for that piece of footage to feature on the main show.

The two founders first made contact around eight years ago when Wilkes, from Walsall, took his last proper holiday and Welsh, from Frimley, Surrey, looked after the site in his absence. Since then, Wilkes has not taken more than a long weekend off, and, even when he does that, he keeps in touch with the site via his laptop and mobile phone.

It was not until three years later that Wilkes and Welsh met in person. At university, they continued to devote their free time to the site. Wilkes who was studying maths at Warwick University, would stay up late at night to talk online to Welsh, who had moved to North Carolina, where he was studying history.

"At one time he was doing uni and then work and then, because I was five hours out, he would stay up until the early hours of the morning UK time to talk to me about what we would do next. It's crazy," recalls Welsh. "No sleep, no holiday, nothing," chips in Wilkes.

It was a labour of love – the pair did not draw a salary until five years in and were supported by their families. But the hard work has paid off. Traffic to the site has roughly doubled every year. Digital Spy is now a profitable business, receiving 84 million page impressions a month, going up to around 130 million during Big Brother. Only MSN, BBC.co.uk and The Sun Online are bigger when it comes to entertainment news.

Aside from putting in the hours, Wilkes and Welsh achieved success by responding to what their users wanted. Wilkes explains: "We started with the TV, then that grew into soaps and that brought in a lot of women, so we added showbiz stuff. It really took off when we started offering the entertainment news. We've just grown it organically." Rapid expansion brought its own problems – despite using all the server technology they could afford, the site could not keep up with demand. When people arrived home from work and logged on en masse, the site would often fall offline. To keep the site running, they needed to raise funds – so, via the forums, they asked users whether they might be willing to pay for the service.

One of the site's early fans was Alan Jay, a founder of the Internet Movie Database (IMDB), who got in touch and helped Digital Spy to go to the next level, by selling advertising. Jay is now the website's chairman.

In December 2006, the site acquired its own offices in Waterloo – Wilkes and Welsh had by this time both moved to London – although it will shortly move to Hachette's building on North Row, near to Marble Arch.

There are eight full-time staff, with another 10 writers working from home. Many of Digital Spy's original scribes were student journalists who wanted to get their names known and were prepared to work for little or nothing. One then-18-year-old has worked the same weekend shift for the site for the last six years.

Many of the stories are lifted from other news sources, but increasingly Digital Spy is generating its own exclusives through its forums.

The editorial team will now report to Anna Jones, Hachette's head of marketing and acting digital chief. Jones is keen to stress that she is not planning any radical changes to what is already a winning formula.

"We don't want to suddenly go in and wreck something which is hugely popular," she says. "When we bought it, there were a lot of people on the forum saying, 'I hope they don't change it'. I felt like going on saying, 'We won't. It's fantastic; we want to carry on with that.'"

But she still believes there are things they can do to improve the site, including making the video offering better, ensuring the forums run faster and more smoothly, and making it more easily navigable.

Digital Spy had outsourced its advertising sales to an agency, but Hachette will now bring this in house.

"It's a profitable business already, but our expertise is in monetising content and that's not their expertise, so that's what we're hoping we can bring," continues Jones. "They're a very small team who have focused on providing great content. They don't have day-to-day contact with clients like we do. They don't understand necessarily how you would maximise cross-selling, because they've got nothing to cross-sell with."

So can Wilkes now relax and take that proper holiday? He looks slightly horrified at the idea, and insists, "I can't. Because of Big Brother."