Both items, however, fall short in their logic and conclusions and also fail to see how the problems extend beyond writers to corporations, sustainable business models, and investors. (I've also covered the same ground myself -- see Huffington Post Makes a Profit? All Hail the New Feudalism! and New Media Dreams Are the Old Delusions of Marketing.)
Start with Nate Silver's piece, titled The Economics of Blogging and the Huffington Post. He tried to analyze traffic in the politics section of HuffPo as a synecdoche, assuming that the traffic patterns there would offer lessons on the site as a whole. Given that he quotes Huffington saying that this single section accounts for 15 percent of the site's traffic, I'd say that's a self-selecting group of people.
In addition, politics tends to bring out a particularly, um, vigorous response by commenters, and that is key to Silver's approach to analysis. As I did, he took overall site traffic numbers from Quantcast, probably because HuffPo directly reports to that company, so it's a fairly accurate view. But contrary to popular opinion, there's no direct correlation between traffic levels and the number of comments a post gets. There's also no reason to assume that page views distribute evenly between the news stories and the blog posts in HuffPo's politics section.
Silver and I both saw similar patterns in the traffic evidence we used. (I took HuffPo's own page view ratings of its top 10 blog posts on a day and then, finding that they nicely fit an exponential curve, did the likely projection.) Silver's is first; a similar graph I published last October follows:
Silver's next mistake is more substantial. He writes about average page views and the revenue they might generate -- but these distributions are anything but normal. Averages are largely useless, and the vast majority of blog posts are unlikely to get anything close to "a couple thousand page views." I suspect that the median number of page views -- the middle of the spread -- is closer to zero. So there's no real economic value in that sense that HuffPo could share with writers.
That's not why they wanted the bloggers there in the first place, of course. What the blogs provide is search engine optimization (SEO) gold on three fronts:
- Most people will blog about the big topics, so the HuffPo site in general has lots of references to what people search for.
- Search engine algorithms take into account the amount of fresh content appearing. That's why Demand Media (DMD) and other content mills are successful on getting good rankings on Google (GOOG).
- If you have thousands of bloggers who want exposure, you can bet that they are linking to your site from everywhere, including in the comments fields on other high traffic sites. That is more SEO advantage.
But they miss the danger for corporations in trusting to the kindness of donators. As I wrote last fall, eventually serfs get tired and go on to something else. How are you going to keep them down on the farm after they realize Paris is a few steps away? And when you want free or pitifully cheap content, how do you argue against someone taking what you have, in turn? It's all a shell game waiting for the first big crack.
As Carr wrote:
I ended up thinking about all this when I was encouraged to sign up for Quora, the burgeoning question-and-answer social site, by some of my more tech-minded friends. As I was going through the registration, I had a "hey, wait a minute" moment: right now, my in-box is full of all manners of questions and requests I can't get to, some of them from my own family. What in the world am I doing wandering out into a community of strangers to answer and post questions?From a business view, the words of Yogi Berra might eventually be more apt: "Nobody goes there anymore. It's too crowded."
- Why Did Arianna Huffington Sell HuffPo? Payoff and Paywalls, Baby!
- AOL Buys Huffington Post: 3 Reasons It's a Big Mistake
- Forbes.com: Don't Steal Our Content. We Took It Fair and Square
- Content Mill Bubble? No, Just Hype and a Business Model Shake-Out
- Huffington Post Makes a Profit? All Hail the New Feudalism!
- New Media Dreams Are the Old Delusions of Marketing