Can a content business scale on the Internet?

Can a content business scale on the Internet?

That’s the question that’s bedeviled an uncounted number of start-ups, and established businesses, in the decade and a half of publishing’s Internet era. While many individual writers and small, community start-ups have found their way to ramen profitability online, big businesses (and aspiring ones!) continue to look for the formula that consistently allows them to build large-scale, national chains of profitable content-driven publications online, as companies such as Gannett and Scripps did with printed newspapers in the past century.

Two recent events involving AOL have brought this question back into my mind. The first was the leak earlier this month of The AOL Way, a strategy for the company’s writers to develop more (and more popular) articles on its various websites.

Critics derided the strategy as reducing writing to mere formula, with some comparing AOL to Demand Media.

Later this month came the second event, as AOL bought Huffington Post and appointed HuffPo founder Arianna Huffington to oversee AOL’s editorial operations. HuffPo’s given its share of critics the vapors, too, including the LA Times’ Tim Rutten who derided HuffPo as “a galley rowed by slaves and commanded by pirates.” (FWIW, HuffPo pays for its wire feeds of content from other news sources, just as the Times and other newspapers do. It also pays a staff of professional reporters, in addition to hosting blogs written by readers.)

So let’s revisit the question: Can a content business scale on the Internet? Can you run a large-scale, profitable news publication online? And if so, does it have to rely on hard, search-engine-friendly formulas or free writers to survive?

Writing begins as a personal act. An individual summons words from within his or her mind, then puts them to paper, voice or screen. That’s why I believe that seeing formulas put to screen enrages some writers. But unless you want to sound like the raving outcast on a random street corner, at some point a writer needs to employ some basic conventions to ensure an audience understands what you’re trying to say.

In that respect, all effective writing employs formulas.

Newspapers have been demanding formula writing from their reporters for generations: inverted pyramid, AP Style, citation rules, etc. Part of this demand lies in the desire to communicate effectively with a broad audience. But much of it also comes from a need to standardize production. Copy desks need consistent writing style from reporters so they can effectively edit large numbers of stories in a limited time. Wire services demand consistency in style and presentation so that articles can fit into a large number of publications.

Anyone who’s tried to crank out the copy for a daily paper knows that you can’t bother channeling your inner Faulkner (or inner Christopher Nolan, for OJR-reading movie fans), if you want hit your mandated byline count. You’ve got to stick with the formula.

So it’s no surprise that AOL would have wanted to play by those same rules. It just bothered to make those rules explicit for its growing army of writers.

There is another way to build a large online publication, however. And to do so in a way that allows individual writers to maintain more distinct voices. It’s the model employed by massively popular (and profitable) sites from Slashdot to Daily Kos to, yes, Huffington Post.

It’s to envision your site not as a top-down, centrally edited publication but as a community of individual voices.

This approach does not prevent site editors from influencing the direction, or even maintaining control, of the publication’s overall voice. But it does allow individual voices to publish without the hands-on editing of a higher-up in the organization (though members often have to abide by stated community rules, and in the case of HuffPo, get an invitation from an editor before being allowed to post.)

But is a free model fair to the people who write for these sites?

Personally, I find that question incredibly condescending. People aren’t idiots. If they don’t see themselves getting value in return for what they write on a website, they won’t write.

Thanks to Nate Silver, we now have a rough estimate of just how much hard-revenue value an individual blogger brings to HuffPo. And it ain’t much.

Silver demonstrates something that I’ve seen for myself in tracking the analytics on my websites for years: That pages revenue on websites adheres to a basic power law, and that per-page revenue diminishes sharply beyond a relative handful of high-earning pages. For most pages on a website, each individual page is worthless from an ad revenue perspective.

For both the writer and the publisher, value is found not in the ads served or clicked on those pages, but in the community surrounding them. For readers and contributing writers, their reward is being able to read and be heard within the community. For the publisher, the community creates a critical mass that creates ad and sponsorship value for the collection of its pages greater than its individual pages could leverage alone.

Don’t fall into the trap of seeing these writers as “free.” If a publisher isn’t cultivating a community of value for these writers, no one will submit a thing.

Of course, publishers can use community building and formula writing to create value. But I believe that community building offers one other huge advantage over simply employing an army of live or automated formula writers – it’s not nearly as dependent upon search engines to drive traffic.

Take Demand Media out of the Google search engine results, and where would that company be? (Hint: Getting less traffic than an old “All Your Base Are Belong to Us” photo mashup.) By contrast, take DailyKos out of Google, and would anyone even notice?

Communities drive their own traffic. They protect and cultivate individual voices. They create value greater than their individual parts. All reasons why, again, journalism leadership in the 21st century needs to move beyond the poorly-scaling editor-centric model and instead embrace the methods of community organizing.

Yes, content businesses can scale online. But only so far as the communities supporting them grow.

Why the death of syndication is great news for hyperlocal and niche sites

Clay Shirky makes a wise prediction for 2011. It is called widespread disruptions for syndication:

Put simply, syndication makes little sense in a world with URLs. When news outlets were segmented by geography, having live human beings sitting around in ten thousand separate markets deciding which stories to pull off the wire was a service. Now it’s just a cost.

If you happen to run a hyperlocal or niche publication, this prediction is a good one. Internet is built on the idea of having just one copy of everything, accessible to everyone. If you produce those original pieces of content, no need to worry. If you’re in the business of aggregating others content, prepare for a rough ride.

The idea of one copy surfaced last winter along with Jaron Lanier’s book You Are Not a Gadget. Internet pioneer Ted Nelson originally coined the term and Lanier summarizes it well:

Instead of copying digital media, we should effectively keep only one copy of each cultural expression.

Internet is the great antidote for the Gutenberg printing press: instead of enabling us to make copies cheaper and faster, it makes the whole idea of copying obsolete. Why copy if you can make a link to the original?

Anyone who has worked in an online newsroom knows the problem of copying. How much time we should spend following the other news outlets, copy their breaking stories with a punchier headline and a quickly written comment? And how much effort should be spent creating original content and our own breaking stories?

The idea of “do what you do best, link to the rest” is not new, Jeff Jarvis wrote about it already in 2007. But for some reason, linking seems to be really difficult for news organizations. The idea of having everything on your site comes from the old editorial culture. Newspaper is the complete package of yesterday’s events; TV newscast is today’s package of everything important. If you leave something out, people will probably change the channel or cancel the subscription. But in the Internet, there are no packages, channels or subscriptions. There is just one big mess of links.

When Ted Nelson was making the first designs for something like World Wide Web, it didn’t have copies but one giant, global file.

The whole of a user’s productivity accumulated in one big structure, sort of like a singular personal web page.

So the idea of Internet — and the technology behind it — is exactly the opposite to the idea of a traditional newspaper publishing. We are not creating our own publications or single ‘destination’ websites but building a giant, single web. Work against this principle and you’ll end up in trouble. This is why paywalls are failing on the Web, in mobile and will fail in most cases on iPad. Once you start blocking iPad users from your website to sell more apps, you are encouraging readers to make copies, not subscriptions.

But all this is great news for small publishers, such as hyperlocal news or niche sites. You can be a part of that single Web page of Internet news. Concentrate on the original content instead of copying; create the one copy only you or your organization can create. If you don’t believe me, listen to Gawker’s Nick Denton: scoop generates audience, which in turn generates advertising.

The end of syndication is good news for journalists as well. When publishers start creating more original content instead of hastily made copies, the human element comes back to the process of journalism. The creator of the original content becomes more valuable, because it is still pretty difficult to make copies of people.

I might sound like a technophile, but the irony is that Google News is already helping original content to surface above copies. Google News algorithm knows who published the original story first. If your news site covers the same story and doesn’t include the link to the original story in the first paragraph, you can kiss Google News front-page goodbye.

And it was Google News algorithm that made us aware of the syndication craze. Who could have imagined there were 12,000 copies of the ‘Somali pirates’ story without Google telling it to us. Now Google is punishing us for making those copies. Who saw that one coming?

Pekka Pekkala researches sustainable business models at USC Annenberg, is a partner at Fugu Media> and a technology columnist. He used to be the head of development at Helsingin Sanomat, the largest Finnish newspaper.

Microsoft and News Corp. are pursuing yesterday's solution to today's challenges

News Corp.’s alleged plan to shield its online content from Google’s search engine in favor of having it indexed by Microsoft’s Bing is a brilliant content business strategy… for the 20th Century.

But, today, it illustrates just the latest example of backward-thinking by legacy media executives who’ve been left lost and clueless by the Internet revolution.

Microsoft needs to do something to distinguish Bing from market leader Google. (And simply renaming its Live search engine didn’t get that done.) News Corp., like any business looking for growth, wants to find a new source of revenue.

So, instead of making its content available for indexing on all search engines, News Corp. could decide to make it available only to one search index, in exchange for payment or some other consideration from that search engine’s owner. On the surface, the deal makes great sense for both sides: News Corp. gets cash (or some other payment of value) and Microsoft gets unique content in its search results – pages that readers can’t find elsewhere.

That’s the way many successful content deals have happened in the past. Think how sports leagues sell broadcast rights to their games to selected networks or channels. Or how cable and satellite companies have split popular channels across several packages, “encouraging” customers to move up to more expensive subscription tiers. It’s all about exchanging cash for access.

But that model is beginning to fail. The benefit to Microsoft in a potential deal with News Corp. is having News Corp. pages in its Bing search results that readers could not find elsewhere.

Except… they can. Tim Berners-Lee’s analogy of the Internet as a Web is complete. Content no longer exists solely within silos, accessed only through its defined channel. Online content is enmeshed with that web – linked to, and thereby accessible from, countless outside sources.

News Corp. can close its content to Google’s spiders. But Google will continue to index the millions of other webpages, including blogs, Twitter feeds, discussion forums and other news sites, that link to News Corp. webpages, from Fox News reports to Myspace profiles. Those linking pages will continue to provide access to News Corp. content through Google and other search engines, even when (or if) News Corp. changes its robots.txt file to block Googlebot.

Some bloggers and other writers have reacted to the news of a possible deal with glee – hoping that exclusion from Google will render News Corp. content invisible on the Web. Heck, I’d love to see all references to the Fox News’ cynical Republican-propaganda-masquerading-as-news disappear from the Web, too. But even if News Corp. withdraws its pages from Google, the references to those pages will not disappear. Taking News Corp. out of Google won’t make sites like Red State and Real Clear Politics vanish.

Producers have attempted to close these backdoor channels for content before. Who remembers the battles that many sports franchises fought with bloggers and even newspaper reporters to prevent them from posting scores and descriptions during games? The teams feared that online “broadcasts” of their games would compromise lucrative deals with radio and TV partners.

Today, those battles are mostly over. If anything, sports teams have moved on to trying simply to keep their athletes from Tweeting in the middle of games. Forget about the folks in the press box.

So what’s the value to Microsoft? Perhaps if News Corp. websites used Bing for their internal site search, there’d be some value in driving more readers to Microsoft’s search engine. But that’s a different deal, one that does not require exclusion from Google’s index. Perhaps News Corp.’s conservative audience might be convinced to use Microsoft’s Bing out of ideological loyalty, but let’s not forget that Microsoft is the “MS” in the right wing’s hated MSNBC. So that’s likely a non-starter.

I’ve heard many legacy news managers complain that the advertising model is dying online. From personal experience, both in my own ventures and watching others, I can attest that’s certainly not the truth. The model remains viable, even if it can no longer deliver the level of profit margin at the sales volume to which the news industry’s grown accustomed. (In math terms, the “model” is the equation that describes a relationship. The numbers that the model spits out can change even as the model remains the same.)

The Internet is killing one legacy media business model, however, and that’s the supply-side model based on creating value by restricting access to content. That’s the model upon which the News Corp.-Microsoft deal is based. While it might have worked in a pre-Web, channel-driven world, the public simply has spun too many ways around content-control deals to make this one worth Microsoft’s time or investment.

Bing will have to find another way to distinguish itself from Google.

And Rupert Murdoch will have to find other ways to make money off his crud.