The economics of letting your audience blog somewhere else

Spotted isolated bits of chatter over the weekend about this piece from Nate Silver, who used the available public data from Quantcast and elsewhere to make some assessments of the Huffington Post’s business model when it comes to unpaid contributors and their blogs.

Here’s Nate’s thesis:

“Although The Huffington Post does not pay those who volunteer to write blogs for it, this content represents only a small share of its traffic. And, to put it bluntly, many of those blog posts aren’t worth very much.” #

The rest of the analysis proves out that idea, which I’m not terribly interested in. It’s a fun game to play, evaluating traffic and revenue based on bits of public information, but I think there’s a less tangible benefit to hosting what essentially amount to “reader” blogs — even if the “readers” happen to be famous people or politicians.

The benefit in question? These readers are far less likely (I’m making a big assumption here, no research backing this up yet) to blog somewhere else.

So instead of diluting that long tail of niche content (this may be a nice way to put it, in some cases) across hundreds or thousands of free Tumblrs and WordPress.com blogs and Blogspots, the Huffington Post and others like it have provided a technology platform to would-be bloggers. Perhaps even to celebrity dilettantes. In return for hosting these blogs — which at scale cannot be an expensive technical tally — HuffPo gets to add another mug to its stable, another self-promoting-but-not-enough-to-get-their-own blogger to stretch that long tail out.

A few interesting metrics I’d love to see on these “reader” blogs:

  • Bounce rate: Do readers hit these posts and leave, or do they get sucked in by the gaping maw of the HuffPo photo galleries and top 10 lists in the right rail?
  • Search traffic: Do readers find these posts in search engines, or are they coming to HuffPo specifically for these authors?
  • Sell-through rate on these lesser blogs. Is HufPo monetizing the network in any interesting way?

Am I conflating HuffPo’s paid bloggers with unpaid? I genuinely don’t really know who gets paid and who doesn’t, but either way, I think my logic holds up:

The benefits of owning the platform for all these blogs, keeping the traffic moving under the HuffPo brand, keeping readers on their remarkably sticky pages, is as valuable (more?) as the revenue on the pages themselves.

What I would fund: An imaginary challenge for news business models

Last night, I was browsing this year’s public Knight News Challenge entries ahead of the midnight deadline to enter, and I caught myself thinking about what the project doesn’t fund when it comes to supporting journalism.

And the answer appears to be business models.

My friends at the Foundation might dispute this, or maybe not, but rather than make this into a post about what they’re doing right or wrong (after all, I won a News Challenge grant in 2008, and thus, am friendly with a wide swath of the winners thanks to some fun conferences the Knight Foundation was kind enough to fly me out to) I’m far more interested in just playing a bit of Fantasy League Foundation here, making a short list of the things I would support if I had 5 million dollars or so to give away. (Full disclosure: I do not have 5 million dollars to give away.)

Two specific projects I would fund:

1. Technically Philly’s News Inkubator

The team at this Philadelphia tech blog includes Sean Blanda, who you might remember as the organizer of BCNI Philly, along with his other varied credits as a student and professional. Their KNC10 proposal, News Inkubator, would serve as a source for news startups looking for help with the legal, financial, and administrative issues that come with running a real live business. In short, they would have allowed hyperlocal journalism impresarios to focus on content and outsource a modicum of worry on the business side of things to the Inkubator project. At the very least, they’d learn something and put it into action, rather than casting about for friends and neighbors to provide legal support, accounting, and a sales force.

From a post at Wired Journalists by Sean about the News Inkubator project:

“With the administrative burdens outsourced, the barrier for creating a sustainable news organization in the city is lowered dramatically.”

2. CoPress

(Full disclosure: I’m pretty sure I’m still an adviser to CoPress, which became a for-profit company earlier this year after their KNC09 proposal was rejected.)

CoPress is a disruptive innovator in student media, providing student news organizations of all shapes and sizes with hosting, support, and a network of interested developers and journalists to lean on as they move away from legacy content management systems with little flexibility and no room for learning about the actual management of content and systems.

Here’s an excellent short presentation from CoPress on innovation, especially in student news organizations, but with a stylish overview of the challenges facing everyone in the newspaper business:

And a few ideas for projects I’d like to fund:

  • Match up local businesses with mobile news consumers. Foursquare and Gowalla get this. Google certainly gets it. Show me a model that involves delivering deals to mobile news consumers based on their current physical location, and I’ll throw money at it.
  • Connect local nonprofits with local journalists and technologists to provide job training for underprivileged neighborhoods. I’ve written a bit about how I think a coworking space could fit into this sort of model.
  • Replace low-value remnant ad networks and AdSense with forms of advertising that don’t embarrass readers, journalists, and publishers. (Hint: I come to your news site for content and information, not to whiten my teeth.)

Here’s what I wouldn’t fund:

Anyone claiming that their hyperlocal news model is going to scale up to become a cross-country overnight success. Hyperlocal is made of people. You can build something awesome once, in one town, but neighborhood news and advertising is about shoe leather, guts, and determination — not about software. No two neighborhoods are the same, and no two hyperlocal mavens are the same.

What about you? What’s on your news business wishlist this year?

Clay Shirky on micropayments for online news

I am very specifically not enjoying the current wave of handwringing over whether or not some version of micropayments, online subscription, or paywalls could work for typical U.S. news organizations.

But here’s Clay Shirky:

“The essential thing to understand about small payments is that users don’t like being nickel-and-dimed. We have the phrase ‘nickel-and-dimed’ because this dislike is both general and strong. The result is that small payment systems don’t survive contact with online markets, because we express our hatred of small payments by switching to alternatives, whether supported by subscription or subsidy.”

Read the whole thing.

Carnival of Journalism: Are we asking the right questions about online revenue models?

As is my habit, I’m running behind on my Carnival of Journalism post this month, set to the timely and tuneful whistles and bangs of talk about whether a newspaper’s online revenue could support the newsroom, how long the newspaper of record will keep the press running, and what a major metro in a failed JOA can do to survive online.

So, the question, posed by Paul Bradshaw (and be sure to check out the Seesmic thread as well) is as follows:

“How do you financially support journalism online?”

Of course, as is my habit, I’m going to have to sharpen that question up a bit, lest I fall prey to the temptation to speculate wildly about the future of major metro newspapers and their finances, as I’m sure I’ve done in the past.

So let’s get specific.

Here’s what I’m not interested in talking about:

Whether the current online revenue of a giant newspaper could support its newsroom staff.  I think that’s an apples/oranges problem.  Shutting down the press is not a hydraulic maneuver — it does not occur in a vacuum — it affects brand and upsell revenue and staffing and all sorts of parts move and grind against each other when you flip that switch on a large scale.  So, looking at two columns in a spreadsheet and saying “oh, they match” is a bit simplistic for my taste.

Great, so, moving on.

Well, wait, not yet.  One more thing to get out of the way:

I’m not (that) interested (today) in trying to figure out what revenue, then, will support major metro newspapers online.  When a major city loses its last print edition, it will be because it has already been replaced, in terms of reporting, advertising, commentary, and yes, journalism, by (mostly) smaller organizations.

And by definition, I expect a newspaper.com in a no-print city to look and feel infinitely different than it does now, to be a distributed news service, the sum of dozens of tiny parts, a portal to a wide variety of platforms where bits of news pushed out and pulled in.

(Right, so again, these are all the things I’m not going to talk about today. Right. Sure.)

My question, then, is how to support a small, agile, online-only news organization.

And that’s a much easier question to answer, isn’t it?

Let’s start with three obvious ways:

  1. Local Advertising. What?  You thought online advertising couldn’t support online journalism?  Well, it all depends on scale.  If you’re building a community news site for a 10-square-mile area, you’re likely to find a set of local businesses that have never had an advertisement online before, and certainly not running on a news source that exclusively covers the area in which their most likely customers live.  A combination of banner ads sold at reasonable rates, business listings, and sponsorships should bring in a portion of your revenue.
  2. Freemium Classifieds. What?  You thought craigslist killed every possible opportunity for local classified ad sales?  No.  Not in hundreds (thousands?) of markets in between major cities, and maybe not at the neighborhood-level.  Either way, you’re going to make money off classifieds without turning away one-time customers who aren’t interesting in paying to sell that old tricycle.  Here’s how:  Offer new customers five free ads.  After that, they pay.  Businesses always pay.  Real estate brokers and car dealerships pay a premium, especially to add video to their ads.  The key to this?  A simple self-service system.  Keep the interface basic and friendly, and tailor it to your community.
  3. Community-Funded Reporting. What? You’re worried that you won’t be able to pay for long-form investigative reporting on a small community site budget? The simple answer is that the community will pay for the stories that would otherwise be missed by a larger, slower, all-encompassing news organization with a broad coverage area. See the Spot.Us project for live examples of enterprise reporting that were funded, a few dollars at a time, by community members and other interested parties (like me) who don’t live in the area anymore, but still take an interest in local issues.

After that, there are less obvious ways to keep a small organization financially afloat, but they’ll vary based on your skills, staffing, and neighborhood.

Does that local business need a Web site to go with their banner ad?  I hear there are these new things called “blogs” that might be easy for them to maintain once you set them up with one, handling the hosting, domain management, and upgrades for a fee.

Other moving parts to keep an eye on:

  • Ethan Zuckerman asks if ad-support journalism is viable, using the example of a 25k print circulation newspaper as a point of reference for his thoughtful analysis of the logic behind CPM ad pricing online.
  • VentureBeat on changes at Federated Media, a display advertising network for technology blogs and news sites.  The changes seem to focus on getting away from straight-ahead banner advertising.
  • No News Is Bad News, a group in Seattle trying to figure out what to do next with the Post-Intelligencer, which is likely to fold as a print newspaper around 50 days from now after not finding a buyer.

Thoughts on the Tribune bankruptcy

I came back to an office in the suburbs of Chicago yesterday from a lunch with colleagues to the news that The Tribune Company had filed for bankruptcy.  (A journalist told me. Pretty sure it was the NYTimes Dealbook blog I spotted on her screen.)

Thoughts:

  1. This has little to do with Sam Zell’s abrasive attitude, or attempts at sweeping changes throughout the company.
  2. Union members, staffers who took buyouts in 2008, and anyone who put any of their paycheck into the employee ownership scheme in 2008 all appear to the odds-on favorites to be screwed.
  3. Having heard Lee Abrams speak recently, I’ll say this was not the guy who should have been trying to build a culture of innovation at Tribune’s newspapers, but hey, someone had to write the half-crazy memos, right?  It wouldn’t have mattered to the short-term finances of the company if General Patton were giving the motivational speeches.
  4. Bankrupt United Airlines is still in the air.  (Exception to this rule: When I am flying United through O’Hare, one of my flights will be canceled.)

Recommended reading:

Community-funded news launches at Spot.Us

Fellow Knight News Challenge 2008 winner David Cohn took the wraps off the latest iteration of Spot.Us over the last few days, launching an engine for community-funded reporting from donation to publication.

Here’s the explanatory video:


Spot.Us – Community Funded Reporting Intro from Digidave on Vimeo.

I love the idea that Spot.Us could do at least three jobs:

  1. Provide news organizations with investigative/enterprise content they have less funding and staff to produce on their own.
  2. Provide freelancers (increasingly experienced and skilled freelancers recently out of a job at a newspaper, perhaps) with an outlet for reporting and quite possibly, a source of income.
  3. Provide readers with a request line for news in their community.

Plenty more floating around about the launch and the idea today:

Newspapers: Vanishing faster than you think

Philip Meyer, author of The Vanishing Newspaper, in AJR:

“The town crier’s audience was limited to the number of people who could be assembled within the range of an unamplified human voice. Printing changed everything. It made the size of the audience theoretically limitless and, by the creation of multiple records, enabled more reliable preservation of knowledge.

The Internet wrecks the old newspaper business model in two ways. It moves information with zero variable cost, which means it has no barriers to growth, unlike a newspaper, which has to pay for paper, ink and transportation in direct proportion to the number of copies produced.

And the Internet’s entry costs are low. Anyone with a computer can become a publisher, as Matt Drudge demonstrated when he broke the Monica Lewinsky story in 1998 and countless bloggers have shown in the decade since. These cost advantages make it feasible to make a business out of highly specialized information, a trend that was under way well before the Internet.”

These are the basics, the givens, of the post-industrial knowledge economy:

  1. There is no mass audience.
  2. There is no barrier to publication.
  3. The cost of operating legacy organizations increases indefinitely as profit decreases indefinitely.
  4. There is nothing cyclical about this change.

Rinse, repeat, rethink.