How the Ad Revenue Crash Benefits Writers and Readers

David Coursey, in “Paving the Way for Premium Content,” his  6/11/09 Tech Inciter, PCWorld blog post, leads off with “Paid content is the best hope of saving “the media” as we know it.” I disagree with him on that score because the media as we know it is disappearing faster than an ice cream cone in August and I don’t think that’s a bad thing at all. The rest of his article is deadly accurate.

The content aggregators don’t want to hear it, but David’s first point is free and low cost content supported by ad revenue is “absolutely broken.” I’d call it a train wreck in the making. Forget profits, content aggregators like Helium are struggling just to stay alive. Maybe their ad supported model made sense a couple years ago, but they’ve put their train on the wrong track and it’s probably too late to switch.

The quality of content that can be supported by ad revenue simply isnt’ there and the signal to noise ratio of ads to real content drowns out even that content. Coursey says that for premium content to take hold, the free stuff needs to go away. I think it will. When the ad revenue model fails and the content aggregators crash through the wall into the street, free content will disappear for lack of patrons.

Coursey’s second point, that quality costs money, that somebody has to pay for it if they want it puts today’s writers in a much better position. The train wreck is a wide open opportunity for writers who understand what’s going on in the publishing industry. Gordon Crovitz of The Wall Street Journal has seen the writing on the wall and will be offering the WSJ version of a paid subscription in the fall. (see my Newsstand of the Future post for details)

When publishers controlled the presses and distribution, they called the shots. They decided who would write their content and what people would read. The Internet democratizes both. The writers who create content and the readers who want that content are in control now. Self-publishing used to be a “snicker behind the hands” avenue for losers. No more.

Every writer with a computer and an Internet connection has the tools he or she needs to publish. Every reader with a computer and an Internet connection has access to everything. As Chris Anderson puts it in The Long Tail, there are two imperatives to a thriving Long Tail business: “1) Make everything available, and 2) Help me find it.”

All we need to do then as writers is create premium content and help readers find it. They’ll pay for it.

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Beyond Print: The Newsstand of the Future

The thump of your morning newspaper landing at your doorstep, the stop to chat at the newsstand on your way to the office, the latest issue of your favorite magazine in your mailbox are going, going, gone…faster than a new, in the box, Barbie doll on eBay. What’s happening?

The giants of print publishing are falling like dominoes. According to the latest news from UPI, The New York Times Co. is set to cut salaries at the Boston Globe by 23 percent “effective next week.” Guild members turned down a proposed 8.4 percent cut in pay and just a few months ago, The Times said it would close the Globe if salary costs were not cut by $20 million a year. Where will it end?

Gordon Crovitz of The Wall Street Journal thinks one of the answers will be the new Journalism Online service expected to launch in the fall. In an online interview, Crovitz talked about paid subscriptions that will make it as easy as possible for readers to get access to what they want when then want it. He thinks consumers will pay for a subscription service — “don’t hassle me with a pay wall,” give me (the reader) what I want for a reasonable fee.

Of course Crovitz is looking at this venture from the perspective of a publisher as a service to other publishers. Publishers all need the revenue and the online ad model isn’t working. It’s not enough.

People will pay for convenience. They’ll pay for good content. iTunes proved it. But the better model might be Rhapsody, the music subscription service. Traditional print avenues may be closing for writers, but the opportunities that are just beginning to unfold for writers on the Internet are endless. No matter what we have to write about, there are readers out there on The Long Tail that are interested in what we have to say.

Just as the iPod fueled iTunes and Rhapsody, the newest wave of E-readers, shown at Computex Taipei 2009, will expand the market for the written word. It’s true that people expect freebies on the Internet, but it’s also true that people will pay for convenience and for content tailored to their wants.

Picture a person sitting in a comfortable chair, away from their computer, with an inexpensive, lightweight E-reader that’s comfortable in their hands and as easy to read as their favorite book. They’ll need good stuff to read. The print world may be dying, but the opportunities for astute writers are just getting warmed up.

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Writing: A Penny for Your Thoughts?

Not even close. No writer can earn a living out of the ad click tip jar. Associated Content (A/C) calls their payout to writers performance pay while Helium uses the term ad revenue share and bills itself as a co-op. A/C tells you up front that you’ll be paid $1.50 to $2.00 per 1,000 page views while Helium keeps their payment model a secret. Helium only tells you that they share ad revenue with “…active members based on their level of activity and value.” Be careful. If you “fail to participate” and don’t provide the free labor needed to fuel the Helium rating engine, you earn zero.

In plain English, using A/C’s highest performance pay rate, each page view earns you two tenths of a penny. How many writers would contribute their work to a content aggregator if they understood up front that they would be paid so little each time a visitor views one of their articles? Sure you can earn $20 but you must “sell” your material to 10,000 people first.

To be fair, A/C pays up front for exclusive publishing rights and somewhat less for non-exclusive rights. Helium pays anywhere from fifty cents to two dollars and fifty cents up front depending on your writing star status. Helium also runs contests with cash prizes and awards other party favors like badges.

No matter how they present themselves, content aggregators are online publishers. Their main source of revenue, like their print counterparts, comes from advertising. They may not be making a profit now, but the only reason they are in business is to do just that. The real question is will they ever turn a profit and how much of that profit will be shared with the writers who provide all their content?

Online advertising is big business for Google. They earn billions. The sites hosting online ads, and this includes the content aggregators like A/C and Helium earn far less. Helium’s site looks more like the yellow pages with all the ads. And now they’re pushing advertising to the limit with keyword ad links embedded in published articles. The signal to noise ratio of too many ads threatens to drown us out.

Writers depended on publishers when the publishers controlled the printing presses and means of distribution. Publishers have always handed writers the short end of the stick and online content aggregators have taken this to the extreme. But they cannot survive without the content that we as writers provide. We can publish our writing without the middlemen. But can we earn?

The Long Tail provides clues that say we can publish and be paid for our efforts. The Long Tail can free us from the tip jar. I’ll have more to say about this next time.

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