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June 17 2011

12:38

AOL’s regrouped advertising.com is a $500m business

TechCrunch :: Advertising.com Group is a new business unit inside AOL, which includes six separate products: The Advertising.com ad-serving network acquired in 2004) and AdTech, along with more recent acquisitions 5Min, Pictela, GoViral, and the internally built Seed product. (AOL also owns TechCrunch, which is a part of the Huffington Post Media Group). All of that, all together is a $500 million business, which is about a quarter of AOL’s total revenue. AOL is trying to become the ad network for premium brands across the Web.

Continue to read Erick Schonfeld, techcrunch.com

May 20 2011

14:30

This Week in Review: What Twitter does to us, Google News gets more local, and making links routine

Every Friday, Mark Coddington sums up the week’s top stories about the future of news.

Twitter on the brain: Last week, New York Times executive editor Bill Keller got a rise out of a lot of folks online with one of the shortest of his 21 career tweets: “#TwitterMakesYouStupid. Discuss.” Keller revealed the purpose of his social experiment this week in a column arguing, in so many words, that Twitter may be dulling your humanity, and probably making you stupid, too. Here’s the money quote: “But my inner worrywart wonders whether the new technologies overtaking us may be eroding characteristics that are essentially human: our ability to reflect, our pursuit of meaning, genuine empathy, a sense of community connected by something deeper than snark or political affinity.”

This, as you might imagine, did not go over particularly well online. There were a couple strains of reaction: Business Insider’s Henry Blodget and All Twitter’s Lauren Dugan argued that Twitter may indeed be changing us, but for the good, by helping make previously impossible connections.

Alexia Tsotsis of TechCrunch and Mike Masnick of Techdirt countered Keller by saying that while Twitter isn’t built for deep conversations, it is quite good at providing an entry point for such discussion: “What you see publicly posted on Twitter and Facebook is just the tip of the conversation iceberg,” Tsotsis said. GigaOM’s Mathew Ingram, meanwhile, defended Twitter’s true social nature, and sociologist Zeynep Tufekci gave a fantastic breakdown of what Twitter does and doesn’t do culturally and socially.

Two of the most eloquent responses were provided by Nick Bilton, one of Keller’s own employees, and by Gizmodo’s Mat Honan. Bilton pointed out that our brains have shown a remarkable ability to adapt quickly to new technologies without sacrificing old capacities. (Be sure to check out Keller’s response afterward.)

Honan made a similar argument: Keller, he said, is confusing the medium with the message, and Twitter, like any technology, is what you make it. “If you choose to do superficial things there, you will have superficial experiences. If you use it to communicate with others on a deeper level, you can have more meaningful experiences that make you smarter, build lasting relationships, and generally enhance your life,” Honan wrote.

Google gets more local with news: Google News unveiled a few interesting changes in the past week, starting with the launch of “News near you.” Google has sorted news by location for a while now, but this feature will allow smartphone users to automatically get local news wherever they are. ReadWriteWeb’s Dan Rowinski explained why newspapers should be worried about Google moving further onto their local-news turf, and GigaOM’s Mathew Ingram criticized newspapers for not coming up with like this themselves.

Poynter’s Jeff Sonderman, on the other hand, said Google’s feature is still in need of some human curation to go with its algorithmic aggregation. That’s an area in which local newspapers can still dominate, he said, but it’ll require some technological catchup, as well as a willingness to get over fears about linking to competitors.

Another change, not publicized by Google News but spotted by the folks at Search Engine Land, was the addition of an option to allow users to filter out blogs and press releases from their results. This raised the question, what exactly does Google consider a blog? Google told Search Engine Land it relies on a variety of factors to make that decision, especially self-identification. Mathew Ingram ripped this classification, and urged Google to put everything that contains news together in Google News and let readers sort it out. (Former Lab writer Zach Seward wrote about the problems with Google News’ blog label back in 2009.)

Fitting linking into news’ workflow: A discussion about linking has been simmering on Twitter on and off over the past few weeks, and it began to come together into something useful this week. This round of the conversation started with a post by web thinker and scholar Doc Searls, who wondered why news organizations don’t link out more often. In the comments, the Chicago Tribune’s Brian Boyer suggested that one reason is that many newspapers’ CMS’s and workflows are print-centric, making linking logistically difficult.

CUNY j-prof C.W. Anderson responded that the workflow issue isn’t much of an excuse, saying, as he put it on Twitter: “At this point ‘linking’ has been around for twenty years. The fact that this is STILL a workflow issue is almost worse than not caring.” This kicked off a sprawling debate on Twitter, aptly chronicled via Storify by Mathew Ingram and Alex Byers. Ingram also wrote a post responding to a few of the themes of resistance of links, particularly the notion that information on the web is inferior to information gained by old-fashioned reporting.

British journalist Kevin Anderson took on the workflow issue in particular, noting how outdated many newspaper CMS’s are and challenging them to catch up technologically: “It’s an industrial workflow operating in a digital age. It’s really only down to ‘that’s the way we’ve always done it’ thinking that allows such a patently inefficient process to persist.” Publish2′s Scott Karp gave an idea for a solution to the CMS mess.

AOL’s continued makeover: Another week, another slew of personnel moves at AOL. PaidContent’s David Kaplan reported that AOL is hiring “a bunch” of new (paid) editors and shuffling some current employees around after its layoff of hundreds this spring. Overall, Kaplan wrote, this is part of the continued effort to put the Huffington Post’s stamp on AOL’s editorial products.

One of the AOL entities most affected by the shifts is Seed, which had been a freelance network, but will now fall under AOL’s advertising area as a business-to-business product. Saul Hansell, who was hired in 2009 to run Seed, is moving to HuffPo to edit its new “Big News” features. In a blog post, Hansell talked about what this means for HuffPo and for Seed.

Meanwhile, the company is also rolling out AOL Industry, a set of B2B sites covering energy, defense, and government. But wait, that’s not all: AOL’s Patch is launching 33 new sites in states targeting the 2012 election. The hyperlocal news site Street Fight also reported that Patch is urging its editors to post more often, and a group of independent local news sites is banding together to tell the world that they are not Patch, nor anything like it.

Reading roundup: As always, plenty of other stuff to get to this week.

— We mentioned a Pew report’s reference to the Drudge Report’s influence in last week’s review, and this week The New York Times’ David Carr marveled at Drudge’s continued success without many new-media bells and whistles. Poynter’s Julie Moos looked at Drudge’s traffic over the years, while the Washington Post disputed Pew’s numbers. ZDNet’s David Gewirtz had five lessons Drudge can teach the rest of the media world.

— A few paid-content items: A Nielsen survey on what people are willing to pay for various mobile services, Poynter’s Rick Edmonds on The New York Times’ events marketing for its pay plan, and the Lab’s Justin Ellis on paid-content lessons from small newspapers.

— A couple of tablet-related items: Next Issue Media, a joint effort of five publishers to sell magazines on tablets, released its first set of magazines on Google Android-powered Samsung Galaxy. And here at the Lab, Ken Doctor expounded on the iPad as the “missing link” in news’ digital evolution.

— Columbia University announced it will launch a local news site this summer focusing on accountability journalism, and the Lab’s Megan Garber gave some more details about what Columbia’s doing with it.

— The Columbia Journalism Review’s Lauren Kirchner had an interesting conversation with Slate’s David Plotz about Slate’s aggregation efforts, and in response, Reuters’ Felix Salmon made the case for valuing aggregation skills in journalists.

— This weekend’s think piece is a musing by Maria Bustillos at The Awl on Wikipedia, Marshall McLuhan, communal knowledge-making, and the fate of the expert. Enjoy.

November 11 2010

16:00

The Newsonomics of journalist headcounts

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

We try to make sense of how much we’ve lost and how much we’ve gained through journalism’s massive upheaval. It’s a dizzying picture; our almost universal access to news and the ability of any writer to be her own publisher gives the appearance of lots more journalism being available. Simultaneously, the numbers of paid professional people practicing the craft has certainly lowered the output through traditional media.

It’s a paradox that we’re in the midst of wrestling with. We’re in the experimental phase of figuring out how much journalists, inside and out of branded media, are producing — and where the biggest gaps are. We know that numbers matter, but we don’t yet know how they play with that odd measure that no metrics can yet definitively tell us: quality.

I’ve used the number of 1,000,000 as a rough approximation of how many newspaper stories would go unwritten in 2010, as compared to 2005, based on staffing reduction. When I brought that up on panel in New York City in January, fellow panelist Jeff Jarvis asked: “But how many of those million stories do we need? How many are duplicated?” Good questions, and ones that of course there are no definitive answers for. We know that local communities are getting less branded news; unevenly, more blog-based news; and much more commentary, some of it produced by experienced journalists. There’s no equivalency between old and new, but we can get some comparative numbers to give us some guidelines.

For now, let’s look mainly at text-based media, though we’ll include public radio here, as it makes profound moves to digital-first and text. (Broadcast and cable news, of course, are a significant part of the news diet. U.S. Labor Department numbers show more than 30,000 people employed in the production of broadcast news, but it’s tough to divine how much of that effort so far has had an impact on text-based news. National broadcast numbers aren’t easily found, though we know there are more than 3,500 people (only a percentage of them in editorial) working in news divisions of the Big Four, NBC, ABC, Fox, and CBS — a total that’s dropped more than 25 percent in recent years.)

Let’s start our look at text-based media with the big dog: daily newspapers. ASNE’s annual count put the national daily newsroom number at 41,500 in 2010, down from 56,400 in 2001 (and 56,900 in 1990). Those numbers are approximations, bases on partial survey, and they are the best we have for the daily industry. So, let’s use 14,000 as the number of daily newsroom jobs gone in a decade. We don’t have numbers for community weekly newspapers, with no census done by either the National Newspaper Association or most state press associations. A good estimate looks to be in the 8,000-10,000 range for the 2,000 or so weeklies in the NNA membership, plus lots of stringers.

Importantly, wire services aren’t included in the ASNE numbers. Put together the Associated Press, Reuters, and Bloomberg (though some of those workforces are worldwide, not U.S.-based) and you’ve got about 7,500 editorial staffers.

Let’s look at some areas that are growing, starting with public radio. Public radio, on the road to becoming public media, has produced a steady drumbeat of news about its expansion lately (“The Newsonomics of public radio argonauts,” “Public Radio $100 Million Plan: 100 Journalist Per City,”), as Impact of Government, Project Argo, Local Journalism Centers add more several hundred journalists across the country. But how many journalists work in public broadcasting? Try 3,224, a number recently counted in a census conducted for the Corporation for Public Broadcasting. That’s “professional journalists”, about 80% of them full-time. About 2,500 of them are in public radio, the rest in public TV. Should all the announced funding programs come to fruition, the number could rise to more than 4,000 by the end of 2011.

Let’s look at another kind of emerging, non-profit-based journalism numbers, categorized as the most interesting and credible nonprofit online publishers by Investigative Reporting Workshop’s iLab site. That recent census includes 60 sites, with the largest including Mother Jones magazine, The Christian Science Monitor, ProPublica, the Center for Investigative Reporting, and and the Center for Public Integrity. Also included are such newsworthy sites as Texas Tribune, Bay Citizen, Voice of San Diego, the New Haven Independent and the St. Louis Beacon. Their total full-time employment: 658. Additionally, there are high dozens, if not hundreds, of journalists operating their own hyperlocal blog sites around the country. Add in other for-profit start-ups, from Politico to Huffington Post to GlobalPost to TBD to Patch to a revived National Journal, and the journalists hired by Yahoo, MSN and AOL (beyond Patch), and you’ve got a number around another thousand.

How about the alternative press — though not often cited in online news, they’re improving their digital game, though unevenly. Though AAN — the Association of Alternative Newsweeklies — hasn’t done a formal census, we can get an educated guess from Mark Zusman, former president of AAN and long-time editor of Portland’s Willamette Week, winner of 2005 Pulitzer for investigative reporting. “The 132 papers together employ something in the range of 800 edit employees, and that’s probably down 20 or 25 percent from five years ago”.

Add in the business press, outside of daily newspapers. American City Business Journals itself employs about 600 journalists, spread over the USA. Figure that from the now-veteran Marketwatch to the upstart Business Insider and numerous other business news websites, we again approach 1,000 journalists here.

What about sports journalists working outside of dailies? ESPN alone probably can count somewhere between 500 and 1000, of its total 5,000-plus workforce. Comcast is hiring by the dozens and publications like Sporting News are ramping up as well (“The Newsonomics of sports avidity“). So, we’re on the way to a thousand.

How about newsmagazine journalists? Figure about 500, though that number seems to slip by the day, as U.S. News finally puts its print to bed.

So let’s look broadly at those numbers. Count them all up — and undoubtedly, numerous ones are missing — and you’ve got something more than 65,000 journalists, working for brands of one kind or another. What interim conclusions can we draw?

  • Daily newspaper employment is still the big dog, responsible for a little less than two-thirds of the journalistic output, though down from levels of 80 percent or more. When someone tells you that the loss of newspaper reporting isn’t a big deal, don’t believe it. While lots of new jobs are being created — that 14,000 loss in a decade is still a big number. We’re still not close to replacing that number of jobs, even if some of the journalism being created outside of dailies is better than what some of what used to be created within them.
  • If we look at areas growing fastest (public radio’s push, online-only growth, niche growth in business and sports), we see a number approaching 7,500. That’s a little less than 20 percent of daily newspaper totals, but a number far higher than most people would believe.
  • When we define journalism, we have to define it — and count it — far more widely than we have. The ASNE number has long been the annual, depressing marker of what’s lost — a necrology for the business as we knew it — not suggesting what’s being gained. An index of journalism employment overall gives us a truer and more nuanced picture.
  • Full-time equivalent counts only go so far in a pro-am world, where the machines of Demand, Seed, Associated Content, Helium and the like harness all kinds of content, some of it from well-pedigreed reporters. While all these operations raise lots of questions on pay, value and quality, they are part of the mix going forward.

In a sense, technologies and growing audiences have built out a huge capacity for news, and that new capacity is only now being filled in. It’s a Sim City of journalism, with population trends in upheaval and the urban map sure to look much different by 2015.

Photo by Steve Crane used under a Creative Commons license.

July 21 2010

16:05

Writers Explain What It's Like Toiling on the Content Farm

content farms logo small.jpg

"We are going to be the largest net hirer of journalists in the world next year," AOL's media and studios division president David Yun said last month in an interview with Michael Learmonth of Ad Age. Yun suggested that AOL could double its existing stable of 500 full-time editorial staffers in addition to expanding its network of 40,000 freelance contributors. Many of the jobs will be added to its hyper-local venture, Patch, while the majority of AOL's freelancers will work for the company's content farms -- Seed and the recently acquired video production operation, Studio One.

These two areas into which AOL is ambitiously expanding are the fastest growing sectors of the journalism market. Hyper-local networks like Outside.in and content farms such as Demand Media are flourishing. As Yun's bold prediction indicates, more and more journalists will end up working for new online content producers. What will these new gigs be like? To better understand, I reached out to people who have already worked with some of the big players.

Life of a 'Content Creator'

"A lot of my friends did it and we had a lot of fun with it," said one graduate of a top journalism graduate program when asked about her work for Demand Media. "We just made fun of whatever we wrote."

The former "content creator" -- that's what Demand CEO Richard Rosenblatt calls his freelance contributors -- asked to be identified only as a working journalist for fear of "embarrassing" her current employer with her content farm-hand past. She began working for Demand in 2008, a year after graduating with honors from a prestigious journalism program. It was simply a way for her to make some easy money. In addition to working as a barista and freelance journalist, she wrote two or three posts a week for Demand on "anything that I could remotely punch out quickly."

The articles she wrote -- all of which were selected from an algorithmically generated list -- included How to Wear a Sweater Vest" and How to Massage a Dog That Is Emotionally Stressed," even though she would never willingly don a sweater vest and has never owned a dog.

eHow.jpg

"I was completely aware that I was writing crap," she said. "I was like, 'I hope to God people don't read my advice on how to make gin at home because they'll probably poison themselves.'

"Never trust anything you read on eHow.com," she said, referring to one of Demand Media's high-traffic websites, on which most of her clips appeared.

Although chief revenue officer Joanne Bradford has touted Demand's ability to give freelancers a byline and get their pieces published to "a great place on the web," the successful writers I interviewed made great efforts to conceal their identities while working for the content farm.

The prospect of seeing their names in the travel section of USAToday.com or the small business page of the Houston Chronicle's website -- two newspaper sites where Demand now contributes content -- did not interest them. The working journalist who previously wrote for Demand is only listed as "an eHow Contributing Writer" on her pieces while Christopher, another Demand freelancer I spoke with who asked to only be identified by his first name, chooses to write under a pen name.

(Note: MediaShift tried multiple times to get Demand Media to talk to us on the record for this series, but they declined, saying they were not doing media interviews due to competitive reasons.)

Churning it Out

Like the working journalist, Christopher cited Demand's compensation as his primary reason for working with the company. For the past two years he has written for the company to supplement the salary he earns as an adjunct professor at a mid-sized Midwestern university. Although Demand pays only a meager $15 or so per piece, by choosing easy prompts and writing them up very quickly, Christopher managed to collect a tidy sum for his time and effort. Christopher forces himself to pump out a minimum of three per hour for three hours a day. "For me it's always the hourly rate," he said. "I won't [write for Demand] if I feel I can make money doing something else."

Christopher has tried other content farms but keeps coming back to Demand Studios. Lured by higher per-article pay rates from AOL's Seed, he wrote three pieces, only one of which was published. Unlike at Demand or Yahoo's Associated Content, which pays as little as $0.05 a piece, Seed freelancers cannot claim a given topic. So even though this actual story request for a thousand word piece on post-traumatic stress disorder among doctors and nurses in the military might earn a freelance journalist $205, they could also earn absolutely nothing for their labor.

Seed of Hope?

As Yolander Prinzel of the blog All Freelance Writing explained, to freelance for Seed, you must create "content on spec, without any real direction and cross your fingers hoping you didn't just waste your time ... You and goodness knows how many other writers all rush to find that magical, mystical voice that will satisfy the faceless editors."

Unable to determine what had caused Seed to buy one of his pieces for $30 and reject the other two without any substantial feedback, Christopher told me he "just said screw it. It's so random."

waletpop.jpg

Other AOL contributors have had better luck with Seed. Since February, Megan Cottrell has been a regular contributor to Wallet Pop, a consumer finance site owned by AOL.

Although Cottrell uses the Seed system to post and edit stories, her clips owe less to a mastery of SEO alchemy than to old fashioned networking: She began working with Seed after she met one of Wallet Pop's editors.

"I haven't done Seed the way it's set up [to work for most writers]," she told me. "I've pitched stories to [the Wallet Pop blog] Money College and had stories assigned to me."

Although Cottrell's experience is likely very different from that of most Seed freelancers, AOL's use of her writing is indicative of how the company aims to leverage the work produced from the content farm. A story she wrote about student loan debt was featured in the slidebar at the top of AOL's home page. Homegrown content from Seed can be featured or linked to on multiple platforms, all of which can earn the company valuable page views and the corresponding ad dollars.

According to a MediaShift interview with Brian Farnham, the editor-in-chief of AOL's hyper-local venture Patch, using content from Seed "is something we're testing and exploring, to exploit if we can, and enhance the local professionally done journalism that we're doing."

In an upcoming story this week, I will take a look at what it's like to work at Patch, as well as other hyper-local ventures.

*****

Have you worked for a content farm? Would you consider doing so? Share your thoughts in the comments below.

To read more stories in the Beyond Content Farms series go here.

MediaShift Editorial Intern Davis Shaver contributed to this article.

Corbin Hiar is the DC-based editorial assistant at MediaShift. He is a regular contributor to More Intelligent Life, an online arts and culture publication of the Economist Group, and has also written about environmental issues on Economist.com and the website of The New Republic. Before Corbin moved to the Capital to join the Ben Bagdikian Fellowship Program at Mother Jones, he worked a web internship at The Nation in New York City. Follow him on Twitter @CorbinHiar.

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May 20 2010

14:00

The Newsonomics of content at the margins

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Yahoo’s purchase of Associated Content, for over $100 million, seemed to come out of the blue. Actually, though, it didn’t. Yahoo made a foray at buying Demand Media two years ago, but the parties couldn’t come to terms. At that point, Demand’s model seemed to make sense, but hadn’t matured to a point of conventional-wisdom validation.

We’re now at that point: The well-dissected, advertising-drives-content Demand model is at the center of Demand Media, AOL’s Seed, Examiner.com and Associated Content. The Newsonomics of content arbitrage that I wrote about for the Lab a month ago is a certified phenomenon; the conventional wisdom is that these algorithm-driven, user-gen-aggregated, SEO-augmented, metrics-monitored businesses are at the center of a new way to produce “content.” Not news, mind you, but newsy content, some of it wonderfully useful, some of it wince-worthy. News content is far too costly to produce, doesn’t produce enough of a long-tail and doesn’t link that easily to commerce — the buying of stuff that fuels advertising.

The newsy stuff, though, is an annuity. That’s an interesting term, used by Associated Content CEO Patrick Keane, when I interviewed him a couple of weeks ago. An annuity. That’s a business made from the long tail. Pay for something once — and not much; in the case of Associated Content, $5 to $30 per piece — and monetize it forever. That’s why the evergreen content encouraged by the Associateds and Demands runs to “How to Teach Your Dog Sign Language,” and “10 Surefire Tips on Selling Your House at a Competitive Price.

It’s content written for search engine optimization (good piece on SEO ascendancy Monday by the Times’ David Carr). It’s also, to put it simply and directly, ad bait. Ad bait of the kind that newspaper ad directors could only dream about over the decades, the kind they gained with advertorial sections (wedding guides, personal finance sections) as journalists — can you imagine! — wrote stories about what they thought was newsworthy. The hubris — and sometimes, good news judgment.

It’s those algorithms and deepening technology under content, under advertising and under the matching of the two, that drives this Yahoo/Associated Content deal. Over the last several years, Yahoo has built an advertising targeting platform on acquisitions (Right Media, BlueLithium) and its own development, leaving the paid search business to Google and Microsoft. That platform is all about matching up content, web users, and advertising messaging. Yahoo has fine-tuned it, though it’s always a work in progress. It’s brought in partners (including half of U.S. newspaper companies) to gain more inventory and identified its future along those user/content/advertising lines.

The next step: Gain lots more content to sell ads against. Yahoo can do that several ways: organic growth; more partnerships; bringing more content under its own brands, on its own site. The Associated Content buy meets that third goal. The $100 million purchase price buys the annuity, lots of ad-bait content to feed the ever-smarter ad engine.

Here’s the best part: margins. When I asked Patrick Keane, who will apparently be joining Yahoo as part of the deal, how much of Associated’s revenue derived from selling ads on its own site and how much from partner sites to which it licensed the cheap user-gen content it aggregated, he didn’t want to talk percentages. He did acknowledge that more than half, though, came from the Associated site. And Keane liked it that way. Why? “The margins are a lot better,” he told me.

That’s a simple statement, but one driving much of the new digital business. Revenue and profit growth are going to get tougher for such big companies as Yahoo and Google, and it’s a big challenge for the new independent AOL. One way to boost dollars is to boost margins. That means transacting more business on your own site — where you don’t have to share revenues with other sites, other content owners.

I’ve tracked Google’s progression along those lines. Go back to 2004. Then, Google reported that 49 percent of its revenues were coming from affiliate sites, as it offered its technologies to help affiliates make a few bucks. That was the high-water mark of affiliate earnings, by percentage. In 2009, the affiliate percentage was down to 30 percent; 66 percent of revenues come from Google’s own sites. Over time, it has smartly directed more and more traffic to stay at its owned websites — its time-on-site has increased consistently — and monetized that traffic, without having to share revenues. In part, that’s contributed to its amazing profit growth, a banner $6.5 billion in profit, up $2 billion year-over-year, in the terrible-for-everyone-else 2009.

Yahoo breaks down its revenue into “owned and operated” sites and “affiliate” sites, though its trend lines are less easy to see. Clearly, though, the push toward O&O revenue is a key one, and one that the Associated purchase reinforces.

What might that push mean for Yahoo’s affiliates, especially those in the Newspaper Consortium, which have gladly used Yahoo ad technology to better their ad rates in selected topical areas? It’s hard to see how it is good news. The Associated content aims at many of same topical categories that newspaper sites target; so the industry looks like it has gained new competition — competition owned by its partner.

Maybe more significantly, Associated is welcomed on the Yahoo site by Matt Ledma, Yahoo VP for local. “We feel that a contributor-driven model is absolutely part of the future of media,” Idema told Reuters. User-gen content can be topical — travel, health, pets, you name it — and it can be local. Local user-gen is the territory voraciously being chased by Examiner.com. Looks like Examiner may have a new competitor in the pro/am, user-gen local space: Yahoo.

These — Yahoo, Associated, Examiner, Demand — are the companies showing aggressiveness today, leaving one question for the moment: Where are the legacy news-producing companies, those who have long created the features-like content in this picture — and why haven’t they bought these startups or built similar models?

April 15 2010

15:26

The Newsonomics of content arbitrage

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

We’re into a new age of digital news content. Every conceivable kind of company is starting to produce it and find homes for it. Smarter advertising strategies are matching up against the new content. Mix and match exploding content creation with ahead-of-the-curve ad targeting, and you’ve got a new math.

Presto: Content arbitrage. Forget “curators”; an accurate but museum-musty term for judgment. As news sites have branched out, bringing in community bloggers and sites, “hiring” top-end bloggers, we’ve come up with the genteel “curation,” a popular term at this week’s ASNE conference, a hot (well, warming) bed of such forward-reaching ideas.

So if want to move beyond “editors,” with its old-world connotations, to get at a reaching out, an aggregation of more content, what’s the proper word? Well, aggregator is technically correct, but it’s Terminator-like. News people don’t like to think of themselves copying the the first, big aggregators like Yahoo, Google, MSN and Huffington Post. (Each of which, not incidentally, sees great next-stage opportunity in content brokerage and are competitors to news companies in this area going forward.)

So let me suggest a title that fits what is going on, though it will make “editors” uneasy: “Content brokers.” I’m not suggested that anyone change a job title to “content broker,” but rather to recognize that’s a huge role going forward. (And even backwards, for us veteran features editors who understood that buying content from diverse syndicates, wires and freelancers was an essential part of the business.)

Let’s go to the newsonomics of content brokering.

Demand Media, fairly and not, has become the poster child of the content-and-ad arbitrage. It’s both been derided as an amoral, slave-wage content farm and marveled at for its absolute smarts about the value of content, and its creation. Just last week, Demand announced a deal to power a “Travel Tips” section for USAToday.com; earlier it had done a lower-profile deal with AJC.com, in Atlanta

It’s just one example of news companies starting to get it about content brokering. The principle is simple: Obtain the highest quality content you can (or at least sufficient to what the market of readers and advertisers demand) at the lowest possible cost. Then, make sure you can make a profit over each set of obtained content. We all understand the idea: Buy low, sell high.

Demand will pay, say, $35 for an article of new treatments for spring allergies, knowing how many pageviews its distribution networks can generate and what cost-per-thousand rates it can get. Maybe it makes $100 or $300 on that article. Maybe it makes a lot more. You can do lots more arithmetic here, with thousands of stories, higher-priced ones and even “free” user-gen ones. The principle, though, is the same.

Newspapers understand that principle. For decades, they employed large newsroom staffs, paid them what they had to, sold advertising, at expectable and rising rates, and took in margins of 20-percent-plus. That’s content-and-ad arbitrage, though it moved at glacial speed and seemed more like a constitutional principle than an evolving business, subject to change.

Now, the arbitrage business is moving at warp speed. Consider just a few of many brokerage initiatives:

  • The New York Times is “buying” content from the Chicago News Cooperative to power its local Chicago edition. It will soon do the same with the emerging Bay Citizen in California. The economics are key here: The Times can’t afford to add full-time staffers at $100k a pop; it can afford something less to get its standard of journalism from other sources.
  • Seattle is hosting the battle royale to aggregate local bloggers. The now-online-only Seattle P-I, led by Michelle Nicolosi, has been signing up bloggers for years, and hosts more than 200 of them, who use the P-I’s publishing system. Across town, Bob Payne, communities director of The Seattle Times, is working with 22 hyperlocal sites in the region. That’s a J-Lab-funded project, which the Miami Herald and Charlotte Observer are also trying. All the newspaper sites get more content, as blogs and bloggers get more notice and traffic.
  • Hearst recently signed up Bleacher Report to provide fan-generated sports content for its sites.
  • Demand’s growing list of competitors to provide brokered content to news companies (and others) includes Associated Content, Helium, Seed, and Examiner, although there are signal differences among them. Outside.In and FWIX both offer pointers to local content of interest and have done deals with news websites.
  • Poynter Institute is even putting a finer point of the business of getting cheaper content, hosting a “Stretching Your News Budget with User Content” seminar in May.

Some of this content brokering brings in community-oriented “user-gen.” Some of it brings in useful content in niche areas, like sports, travel, family, religion and much more. Some does both.

Is there a danger in content arbitrage? It’s value-neutral; it’s all in how you do it. Let’s remember that journalism is essentially a manufacturing process, with as much or as little value added as we want.

On a brand- and content-integrity level, it’s all in exercising good judgment — but against a much wider array of choices. On a business level, it’s making sure you are buying low and selling high. Ironically, many news companies are starting to bring in more content — mostly from local bloggers and sites — but few are seeing ad departments monetize it well. That’s buying cheaply, but if you don’t sell it, it’s not really much of a business advance. That should be temporary, if news publishers and editors take content brokering to heart.

Photo by Petra Sell used under a Creative Commons license.

March 19 2010

15:00

This Week in Review: Loads of SXSW ideas, Pew’s state of the news, and a dire picture of local TV news

[Every Friday, Mark Coddington sums up the week’s top stories about the future of news and the debates that grew up around them. —Josh]

A raft of ideas at SXSW: The center of the journalism-and-tech world this week has been Austin, Texas, site of the annual conference South by Southwest. The part we’re most concerned about — SXSW Interactive — ran from last Friday to Tuesday. The New York Times’ David Carr gives us a good feel for the atmosphere, and Poynter’s Steve Myers asked 15 journalists what they took away from SXSW, and it makes for a good roundup. A handful of sessions there grabbed the attention of a lot of the journalism thinkers on the web, and I’ll try to take you on a semi-quick tour:

— We saw some conversation last week leading up to Matt Thompson’s panel on “The Future of Context,” and that discussion continued throughout this week. We had some great description of the session, between Steve Myers’ live blog and Elise Hu’s more narrative summary. As Hu explains, Thompson and his fellow panelists, NYU prof Jay Rosen and Apture founder Tristan Harris, looked at why much of our news lacks context, why our way of producing news doesn’t make sense (we’re still working with old values in a new ecosystem), and how we go about adding context to a largely episodic news system.

Michele McLellan of the Knight Digital Media Center echoes the panelists’ concerns, and Lehigh prof Jeremy Littau pushes the concept further, connecting it with social gaming. Littau doesn’t buy the idea that Americans don’t have time for news, since they obviously have plenty of time for games that center on collecting things, like Facebook’s Farmville. He’d like to see news organizations try to provide that missing context in a game environment, with the gamer’s choices informed by “blasts of information, ideally pulled from well reported news stories, that the user can actually apply to the situation in a way that increases both recall and understanding.”

— NYU’s web culture guru, Clay Shirky, gave a lecture on the value that can be squeezed out of public sharing. Matt Thompson has a wonderful live blog of the hourlong session, and Liz Gannes of GigaOM has a solid summary, complete with a few of the made-for-Twitter soundbites Shirky has a knack for, like “Abundance breaks more things than scarcity does,” and “Institutions will try to preserve the problem to which they are the solution.”

Once again, Jeremy Littau pulls Shirky’s ideas together and hones in on their implications for journalism in a thoughtful post, concluding that while the future of journalism is bright, its traditional players are clueless. “I just don’t see a future for them when they’re trying to protect information as a scarce commodity,” he writes. “The scarcity, in truth, is in media companies trying to create civic goods via user sharing.”

danah boyd, who studies social media and youth culture for Microsoft Research, gave a well-received talk on privacy and publicity online. It doesn’t have much to do directly with journalism, but it’s a brilliant, insightful glimpse into how web culture works. Here’s a rough crib of the talk from boyd, and a summary from TechCrunch. There’s a bunch of cool nuggets in there, like boyd’s description of the “inversion of defaults” in privacy and publicity online. Historically, conversations were private by default and public by effort, but conversations online have become public by default and private by effort.

— One of the big journalism-related stories from SXSW has been AOL and Seed’s efforts to employ a not-so-small army of freelancers to cover each of the 2,000 or so bands at the festival. The Daily Beast has the best summary of the project and its goals, and TechCrunch talks about it with former New York Times writer Saul Hansell, who’s directing the effort. Silicon Alley Insider noted midweek that they wouldn’t reach the goal of 2,000 interviews.

One of the big questions about AOL and Seed’s effort is whether they’re simply creating another kind of “content mill” that many corners of the web have been decrying over the past few months. Music writer Leor Galil criticized it as crass, complaining of the poor quality of some of the interviews: “AOL is shelling out cash and providing great space for potentially terrible content.” David Cohn of Spot.Us compared AOL to the most notorious content farm, Demand Media, concluding that journalists shouldn’t be worried about them exploiting writers, but should be worried about their threat to the journalism industry as a whole.

— One other session worth noting: “Cult of the Amateur” author and digital dystopian Andrew Keen gave a sobering talk called “Is Innovation Fair?” As Fast Company’s Francine Hardaway aptly summarized, he pointed to the downsides of our technological advances and argued that if SXSW is a gathering of the winners in the cultural shift, we have to remember that there are losers, too.

Pew’s paywall findings: The Pew Research Center’s Project for Excellence in Journalism released its annual “State of the News Media” study, and it’s a smorgasbord of statistics about every major area of journalism, from print to TV to the web. A summary of summaries: The study’s six major emerging trends (expanded on by Poynter’s Bill Mitchell), some of its key statistical findings, and the Columbia Journalism Review’s seven eye-popping statistics from the study.

The biggest headline for most people was the study’s finding that only seven percent of the Americans who get their news online say they’d spring for a favorite news source’s content if it went behind a paywall. (The AP writeup has a few more statistics and some analysis about online loyalty and advertising.) Jeff Jarvis, a longtime paywall opponent, wondered why newspapers are spending so much time on the paywall issue instead of their “dreadful” engagement and loyalty online. Former WSJer Jason Fry breaks down the study to conclude that the basic unit of online journalism is not the site but the article — thus undermining the primary mindset behind the paywall.

Poynter’s Rick Edmonds, who writes the study’s section on newspapers each year, said he’s done with dead-and-dying as an industry theme. Instead, he said, the problem with most newspapers is that they are becoming insubstantial, shells of their former selves. “They lack the heft to be thrown up the front porch or to satisfy those readers still willing to pay for a good print newspaper.” Editor & Publisher pulled some of the more depressing statistics from Edmonds’ chapter. Yet Lee Rainie, who co-authored the study’s section on online economics, said he was still optimistic about journalism’s future.

A bleak look at local TV news: Another fascinating journalism study was released late last week by USC researchers that found disappointing, though not necessarily surprising, trends in Los Angeles local TV news: Crime, sports, weather and teasers dominate, with very little time for business and government. USC’s press release has some highlights, and co-author Martin Kaplan offers a quick, pointed video overview of the report, concluding with a barb about wants and needs: “I want ice cream. I need a well-balanced meal. Apparently the people of Los Angeles want 22 seconds about their local government. Maybe if they got more than that, they’d want more than that.”

FCC Commissioner Michael Copps was “flat-out alarmed” by the study and vowed some vague form of action. Jay Rosen was ruthless in his criticism on Twitter, and Los Angeles Times critic James Rainey used the study as the basis for a particularly well-written evisceration of local TV news. Rainey had the most promising suggestion, proposing that a cash-strapped TV station find a newspaper, nonprofit or j-school interested in partnering with it to build an audience around more substantive, in-depth TV news.

The iPad, magazines and advertising: As we expected, lots and lots of people have been ordering iPads since they went on sale — 50,000 in the first two hours and 152,000 in three days, according to estimates. We’re also continuing to get word of news organizations’ and publishers’ plans for apps; this week we heard that the AP will have an app when the iPad rolls out next month, and saw a nifty interactive feature for the digital Viv Mag. (The Guardian has a roundup of other video iPad demos that have come out so far.)

SXSW also had at least three sessions focusing on media companies and the iPad: 1) One on the iPad and the magazine industry focused largely on advertising — here’s a DigitalBeat summary and deeper thoughts by Reuters’ Felix Salmon on why advertising on the iPad could be more immersive and valuable than in print; 2) Another focusing on the iPad and Wired magazine, with Salmon opining on why the iPad is a step backwards in the open-web world; 3) And a third on iPad consumption habits and their effects on various industries.

Reading roundup: One ongoing discussion, two pieces of news and one smart analysis:

The conversation sparked by Netscape co-founder Marc Andreesen’s advice for newspapers to forget the printed paper and go all-in with online news continued this week, with Frederic Filloux noting that “there are alternatives to envisioning the transformation of the print media as only a choice between euthanizing the paper product or putting it on life support.” Steve Yelvington looked at setting up separate print and online divisions (been there, done that, he says), Tim Kastelle spun Andreesen and Google’s Hal Varian off into more thoughtful suggestions for newspapers, and Dorian Benkoil took the opportunity to marvel at how much things have changed for the better.

The first piece of news was Twitter’s launch at SXSW of @anywhere, a simple program that allows other sites to implement some of Twitter’s features. TechCrunch gave a quick overview of what it could do, CNET’s Caroline McCarthy looked at its targeting of Facebook Connect, and GigaOM’s Mathew Ingram was unimpressed.

Second, ABC News execs revealed that they’re planning on putting up an online paywall by this summer. The Guardian and paidContent have detailed interviews with ABC News digital chief Paul Slavin.

And finally, newspaper vet Alan Mutter examines the often-heard assertion that small newspapers are weathering the industry’s storm better than their larger counterparts. He nails all the major issues at play for small papers, both the pluses (lack of competition and broadband access, loyal readership) and the minuses (rapidly aging population, some local economies lacking diversity). He ultimately advises small papers to ensure their future success by innovating in order to become indispensable to their communities: “To the degree publishers emphasize short-term profits over long-term engagement, they will damage their franchises — and open the way to low-cost online competitors.”

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