The Age of Cheap Content and Content Arbitrage

Ken Doctor from the Newsonomics blog covers the acquisition of Associated Content by Yahoo! for a rumored $90 million. He writes an in-depth analysis and offers a sobering conclusion:

Overall, today’s deal is further evidence we’re into the age of cheap content and of content arbitrage. The stream’s being reversed all around the news business, with advertising driving content creation in ways that those of us who fought print advertorials couldn’t once imagine. Content arbitrage is a feature of the landscape as I recently wrote (“The Newsonomics of Content Arbitrage“) and one that modern media companies must learn. How they use its principles will make all the difference in what they and their brands stand for, but the need to understand the principles is reinforced by today’s deal.

What it means: I think these are two key trends to understand if you’re in the business of content production. Companies like DemandMedia or initiatives like Patch (at AOL) are creating scalable platforms to create low-cost content. Content arbitrage, creating specific content that can be easily monetized, is logical from a business point of view (i.e. go where the money is) but it begs the question from a democracy point of view. Who or what will fund important news reporting that doesn’t monetize well?

Another consequence is that it puts pressure on the price paid for articles.  I had the opportunity to hear Luke Beatty, Associated Content’s founder, at the last BIA/Kelsey conference. One of the things that struck me was the “what’s in it for me” for network writers. Beatty told attendees that you couldn’t really make a living with what they pay but writers were getting exposure, were becoming experts through their use of their platform. This has tremendous impact on journalism. At the same conference, Rick Blair, Examiner’s CEO, described the various contributor levels we find on the Web today: pro, pro-am, amateur, user-generated content (Blair mentioned that Examiner is at the pro-am level).

It’s also forcing news organization to think about content production segmentation. Am I in the business of producing all the content I offer to readers? Am I outsourcing a portion of the content production? Do I want to control the technology platform behind that content production?

In a related article about the Huffington Post’s 5-year anniversary, Henry Blodget talks about disruptive technologies. He says “Disruptive technologies, meanwhile, are emphatically NOT better than incumbent technologies–at least not at the beginning. Disruptive technologies are often worse than incumbent technologies.  Their advantage–the reason people begin to adopt them–is that they’re also simpler, cheaper, and more convenient.”

More questions than answers at this point for news organizations but these trends need to be taken into account when building the next strategic plan.

Social Graph-Based Commenting Systems

Over the course of the last two years, I’ve had the chance to meet with hundreds of traditional media company executives. Often, when talking about social media, one of the first “mental” hurdles that needs to be cleared is negative user comments. In merchant reviews, directory publishers are often afraid of negative ones especially as it pertains to advertisers.  In news comments, newspaper publishers are challenged by negative, sometimes aggressive readers. Certain types of news will inflame passion, attract “trolls” and become hard to manage. It’s sometimes an ugly world out there with racism, homophobia and misogyny.

But if you thought this only happens in traditional media websites, think again. Some of the “new guys” are facing the same problem. Last week Engadget, one of the top gadget blogs, had to turn off their commenting system to cool off troll attacks. Quoted in VentureBeat, Engadget’s editor Joshua Topolsky said:

“We have a huge readership, but the vast majority of our readers do not comment. But we’ve had an influx of new readers due to our iPad coverage last week, which blew away our previous [traffic] expectations. Unfortunately, we’ve also had an influx of readers who are very trollish. (…) They’re not coming here to talk about technology. They’re coming to incite arguments. They’ll post things like ‘VAIOs suck, Macs rule,’ or ‘Macs are gay.’ They’ll go off-topic and get racist or sexist just to be inflammatory.”

Engadget flipped back the comment switch after a couple of days and made a few changes including an option to “switch off the comments entirely if you don’t want to deal with them”. They also laid down a series of ground rules for community participation and provided answers to frequently asked questions.

Now, don’t think comments/reviews are going away! If consumers are not doing it on your website, they will find ways to express themselves elsewhere, on their blog, on Twitter or on Facebook. And you’ll need to start aggregating content back to your site (like Google is doing) to improve your user experience. User comments/reviews are very valuable and they serve to build your community, especially if they happen directly on your site.

In any case, I believe a solution will soon be found to this problem and it will come because of strong identity systems and social graphs. I foresee a time when everyone will log-in using a “real identity” provider. Real identity systems make people more accountable. The other angle is the social graph, i.e your network of “friends”. Logging-in with a “real identity” provider will allow you to see comments from your network of contacts in priority and extend to a few degrees of separation. So, not only will people use their true identity to comment and contribute, they will also see the participation of their social graph first. Consumers will always have the choice to see everything and your friends will be able to recommend comments from strangers to you. Chris Sacca at LeWeb thought we would soon get rid of douchebags because of that. The big question here is: will the non-exposure to external viewpoints create groupthink? Solving one problem might create another…

Additional reading:

  1. Mashable discusses the Engadget situation here.
  2. ReadWriteWeb’s “Open Thread: Dealing With Real-Time Negativity
  3. Editor & Publisher’s “New Tools Aid in Policing Web Comments

The Self-Media Decade

We’re almost at the end of the first decade of the 21st century (yes, it went by really fast!) and it’s probably time to reflect on what characterized the last ten years. Each decade gets its own descriptive “brand” and this one won’t be different. The seventies were all about “the peak of hippie culture“, social change and related values. The eighties were all about the individual, economic liberalization and some would say money and greed but it also saw the end of the Cold War. The beginning of the 90’s was very nihilistic with the grunge movement but finished on a high note with the start of a long period of economic growth, an amazing era of technology innovation and the dotcom boom.

So, what defined the 2000’s? We obviously could talk about September 11, the dotcom bust and the recent worldwide financial crisis but those are punctual events. They definitely influenced the zeitgeist but they are not the zeitgeist. I believe the decade that’s ending was all about “me” and the extreme democratization of media. I call it “The Self-Media Decade”.

It all started with the reality television phenomenon in 2000. Survivor, the famous TV show, ignited the genre and there’s been no looking back since then. Every time you watch television today, you see “real” people in “real” situations. In parallel to that, blogging and blog platforms arrived on the market (LiveJournal in March 1999 and blogger.com in August 1999). Throughout the decade, millions of people took up blogging. Some blogs became a real alternative to newspapers and magazines, journalists started blogging and the line with mainstream media started blurring. In the newspaper industry also, Craigslist democratized classifieds, allowing anyone to post a classified ad online for free. Their first real expansion out of the San Francisco market happened in 2000.

Another parallel was the arrival of Napster, also in 1999. By enabling downloads of individual songs, Napster was allowing everyone to become their own radio programmer (or CD mixer). Why listen to radio (or buy packaged music CDs) when you can just download your favorite songs and get instant gratification. We all knew at the time that television and movie distribution would be impacted in the coming years. Tivo became a phenomenon in itself and created the personal video recorder product category. No need to sit down at a fixed date and time to watch a television show. Can you guess when Tivo launched? Yup, 1999.

On the shopping side, the birth of Epinions (again in 1999) was the first signal of the important role consumers would play regarding merchant and product recommendations via user reviews. Up until then, directory publishers were pretty much the sole gatekeepers in a very advertiser-focused world.

With the introduction of these new sites and tools, the only thing missing was a solid broadcast ecosystem. Facebook (and later Twitter) created those much needed amplifiers starting mid-decade. By building your social graph, you’re creating your own media network. I quickly clued in to this when I wrote my “Robert Scoble is Media” blog post. We were all becoming media (production and broadcast) including myself.

I’m actually a good case study of the power of social media tools. Up until I started blogging in 2006, I had an excellent professional reputation but in a very small circle of industry colleagues and peers. By blogging extensively since then and by using broadcast mechanisms provided by sites like Facebook, Twitter and LinkedIn, my worldwide reputation has grown tremendously. I now have thousands of monthly industry readers on my blog and I’m often invited to speak at conferences. I’ve become an important influencer in the directory publishing industry and I’m amazed at the speed at which it happened.

So, what did we gain as a society? We now have more transparency, democracy and meritocracy. What did we lose? We lost common “experiences” (traditionally focused by media) and we’re not always sure who we can trust out there. There’s a lot more noise. But clearly, we’ve all become media by participating, with everything good and bad that comes with it and this will continue in the next decade.

Directory Publishers: Key Success Factors for User Reviews Deployment

In my dual role as industry blogger and co-founder of a company that provides social media technologies to local media companies (including ratings/reviews), I’m often asked about deployment of user ratings/reviews in the context of a directory publisher.

Here are my current thoughts (in no particular order) about what’s needed to successfully deploy that core user feature:

  1. A separate brand. Up until a few months ago, I would have said that core directory brands were adequate for user ratings and reviews but I’ve come full circle on this. I think you need a separate, “cooler” brand in order to build a community and to drive participation around merchant reviews.
  2. Community management. You need to hire staff to animate the community online and in person in all your major markets. You need to organize real offline events (i.e. get-together and parties) to build up the cohesiveness of your user ecosystem.
  3. Champions. You need to identify your site champions (power users) and nurture them. Give them perks, benefits and empower them.
  4. Rewards system. To influence “positive” user behaviour, make sure you have a virtual rewards system with titles, badges and/or reviewer levels. Make sure that reward system is holistic to take into account user and business interests.
  5. Friend system. You absolutely need a “friend” system to allow users to see what their “friends” are doing in the site. Don’t built it from scratch. Use an existing identity system like Facebook or Twitter.
  6. Engage merchants to join conversation. Directory publishers have great ties with small businesses. They should use that relationship to invite them to come to the review site to engage conversation with users. This starts by allowing businesses to claim their listing(s) and inviting them to leave comment when activities (sales, events, etc.) are happening at their store.
  7. Mobile application. As a lot of activities around merchant reviews happen at the point of sale, you need a mobile application (certainly iPhone and Blackberry) connected to your review site.
  8. Weekly email. You need to send a weekly summary to all your site users to give them a digest of everything that’s happening in their city and/or their favorite categories/merchants. This gives your users a reminder to come back to your site and check out the latest activities.
  9. Crosslink/embed content in your other sites. Even though I recommend creating a new brand for user reviews, you should definitely embed content and links in all your other network sites (for example, in merchant listings and profile pages).
  10. Activity stream + widgets. You need to have an activity stream showing all activities (user reviews, comments, discussions, searches, top, etc.) on your review site and you need widgets to allow 3rd party sites to embed those activities on their own websites.
  11. Promote your new site. “If you build it, they won’t necessarily come”. You need to make sure you’re actively promoting your site through advertising, social media and public relations. That’s in addition to community management and event organization mentioned above.
  12. Local Twitter accounts. Create Twitter accounts for all your major local markets to broadcast local activities to Twitter users interested in following up what’s going on in their city.

Do you agree or disagree with these success factors? Did I forget any critical ones?

Local Advertisers Planning a Big Increase in Social Media Usage

This is a post about the Kelsey Group’s DMS ’09 conference which happened last week in Orlando.

In a presentation titled “Understanding Users and Advertisers – A Deep Dive Into Exclusive TKG Data”, Steve Marshall from BIA/Kelsey provided attendees with some juicy nuggets of information from the 13th wave of their SME Local Commerce Monitor study (and the 6th wave of their user study). This study looks at SMB advertisers and users trends.

Advertiser highlights:

  • The latest wave tells us that SMBs have an on-going need for new customers, are using more digital/online media and plan a big increase in the use of ‘Web 2.0’ capabilities.
    • Penetration of online media exceeds traditional media for the first time
    • Major increases planned in usage of video, social sites and corporate blogs to promote their company

Advertisers Planning a Big Increase in Social Media Usage - Kelsey Group Local Commerce Monitor 2009

User highlights:

  • Search engines continue to have the greatest penetration of information sources for finding local goods and services
    • 90% of consumers surveyed use search engines for that purpose
    • newspapers are up but print Yellow Pages and Internet Yellow Pages are down
  • According to the study, only 16% of consumers trust “social networking sites” as information for local shopping. As I’ve mentioned before, I’m convinced that if we were to ask how many people “trust their friends” for information on local shopping, that number would go up drastically. Social networking sites = friends!
  • 68% of consumers surveyed said that had at least one profile in a social network site
  • 47% think that product/service ratings are important, an increase of 5 percentage point since the last wave

Librivox.org: Community-Created Audio Books

At “Les stratégies d’innovation dans le Web 2.0″ conference, Hugh McGuire gave us some background on Librivox.org, a very interesting audio book creation community.

Hugh Mcguire Librivox

Picture by Philippe Martin

Highlights:

  • Librivox is a project to get volunteers to record audio versions of public domain books.
  • 2500 volunteers
  • Probably one of the most prolific audio book producers in the world
  • Currently 1800 books in their catalog (60 to 70 new books a month)
  • Using WordPress for their web site
  • Home page clearly tells you what you can do on the site.  You can listen or you can volunteer (read for them).
  • 40,000 visits a day, millions of downloads
  • Lot of dedication in the community with a hyper-active group at the top, maybe 50 people who contributed the majority of audio books
  • Internet Archive hosts everything.
  • Inspiration for the project came from the free software movement, how pragmatically successful it was.  Wikipedia and podcasting were also inspiring.
  • Long-term vision: objective to record every public domain work in audio.

Librivox

Rich Barton (Zillow): “Transparency of Information is Power”

On the second day of the Kelsey Drilling Down 2008 Conference, we heard from Rich Barton, Chairman and CEO, Zillow. He exposed us to his thesis that lead to the various projects he’s been involved in in the last 10 years. Before founding Zillow, Barton founded Expedia when he was at Microsoft. His basic thesis is that transparency of information is power. This leads to a consumer revolution in various verticals, releasing things that were locked-up, especially around big financial decisions. He mentioned stockbroking, travel and real estate as three verticals that were forever altered by the arrival of the Web. He also mentioned three other companies he’s involved with in the following verticals: Legal (Avvo.com), Healthcare (Realself.com), and Employment (Glassdoor.com).

Rich Barton Zillow CEO

(picture: zillow.com)

He finished his presentation with a “Power to the people” manifesto that’s very telling in this user-generated content age:

  • Consumer crave information and power
  • If it can be known, it will be known by all (the web causes transparency)
  • If it can be rated, it will be rated
  • If it can be free, it will be free
  • Professionals who are active players in the new vertical marketplaces win
  • There can be no vertical marketplace without community
  • The digital media model rules (local is giant)