Google Declares War On Content Farms, What's Demand Media To Do?
from the the-markets-are-changing dept
Today we have a guest post from Chas Edwards, Chief Revenue Officer at Pixazza, who's been thinking quite a lot about various content-related business models lately, and wrote the following in response to the recent news of Google's algorithm change
Recently, Google announced changes to the PageRank algorithm that will affect nearly 12% of search results. According to their post at Google�s blog, Matt Cutts and Amit Singhal say the changes are �designed to reduce rankings for low-quality sites � sites which are low-value add for users, copy content from other websites or sites that are just not very useful.�
Presumably this will have an enormous effect on content farms such as Demand Media and Yahoo�s Associated Content. So what�s a content farmer to do?
A few days ago I wrote a post expressing my hope that content farms might grow up into something useful and generally less sucky. Maybe I�ve been reading too many happy-ending fairytales to my daughters. But when I pull back from the actual content from Demand or Associated that makes its way to my search results (which is usually quite bad), I see a platform � and platforms, theoretically, are things on which you can build something lame or something good. If the content farmers help individuals with knowledge find questions (search queries) that need answers (topics too niche for large or mid-sized publishers to cover), it seems plausible that some individuals might create useful content.
My argument, though, misses at least two important points, which Glenn Fleishman and Jeff Jarvis helped me think through.
From BuzzMachine:
�Why do people write on Huffington Post? Because they can. Because they give a shit. Because they like the attention and conversation. Because they couldn�t before. Why do they sing their songs on YouTube? Same reasons.�
Jarvis�s argument is: When we�re doing work, we expect to get paid. When we�re doing something for the love of it, we�re motivated by passion and the opportunity to be heard. When we�re doing it for love, in other words, we often create value for free. Quality content is traded for distribution to an audience and for a chance be an authority.
In a Twitter exchange with Glenn Fleishman, he said �The more you spend, the better content you get, up to a point.� His site, Wi-Fi Net News, was one of the first 10 sites that teamed up with Federated Media back in 2005. So my question back to him was: �But what about WFNN in the early days when the money wasn�t great but the content was?�
Aha. It�s about ownership. Glenn is specifically referring to IP ownership (his words, his URL, his business), but there�s a different kind of ownership too � one that Jarvis is getting at. I�m willing to contribute (to the best of my abilities) good content, free of charge, to Twitter, Quora or the Huffington Post even though I don�t own the IP or the business. I�m willing to do that because I do get to own the authority. Those platforms publish my by-line, picture and bio, so if someone out there thinks I�m smart or funny, I own that goodness. I�m not making money, but I get credit. I work hard to create value because, if I�m successful, that content distributed on those platforms polishes my brand and my reputation.
Even if Demand Media keeps most of the money they�re making from their websites, they might dodge the Google bullet if they can improve content quality by giving their contributors a sense of ownership over what they create. And then they marry the handsome prince!
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The recent $315-million acquisition of The Huffington Post and the $75-million or so spent on AOL’s Patch.com hyper-local platform aren’t the only big bets that the media company is making According to a cover story in the latest issue of The Hollywood Reporter, the one-time web portal is also putting some big money down in Tinseltown, where CEO Tim Armstrong has been signing content deals with celebrities such as former supermodel Heidi Klum, singer Queen Latifah and the musical group The Jonas Brothers. In some ways, it appears AOL’s new “content farm” ambitions are designed in part to produce content that can be wrapped around big Hollywood brands. But can this strategy produce enough financial bang to make a difference to a fading giant like AOL?
In the case of Klum and Latifah, the deals with AOL involve websites and content produced by the stars’ production companies, but AOL is going to be helping generate content — including web-based video shows — and promoting the sites through its network as well. According to The Hollywood Reporter, these types of deals involve AOL putting up between $1 million and $10 million per project (some of which comes from advertisers that the company lines up). According to Hollywood sources quoted by the magazine, those kinds of dollars look pretty good compared to what cable networks can offer.
Armstrong suggests that some of the content for these sites will be generated by other parts of AOL, including its Demand Media-style Seed.com “content farm,” whose approach was described in a leaked memo recently entitled “The AOL Way.” The AOL chief executive told the magazine that “the system that we’ve been building — which the press has taken to calling a content farm — is simply a platform,” and gave an example where Klum might decide to produce a video about making jewelry, and the AOL platform could then generate information and other content about how jewelry is made. Armstrong made it clear that he thinks content is the future of the Internet:
The first phase of the Internet was about access, and I believe AOL was the biggest player in that phase. Then the next phase has really been about the platform, so you’ve seen Apple, Google and Facebook there. But the phase after this is going to be more of the Hollywood phase, where it’s about content, creativity and really putting a human face on the Internet.
In addition to using its content farm to generate material to wrap around these celebrity sites, AOL also used its own internal research to decide which celebrities to approach. According to The Hollywood Reporter piece, the company only took its “Planet Heidi” idea to the supermodel after its algorithmically-generated “quality score” showed that Klum was influential on topics like parenting, fashion and style — all of which appeal to the female demographic that Armstrong wants to focus AOL’s content on — and after Johnson & Johnson and Procter & Gamble had signed on.
The big question, of course, is whether this Hollywood strategy is going to produce enough revenue to make a difference for AOL, a company that is still in fairly precarious financial shape: in the final quarter of last year, for example, revenue sank by 26 percent and advertising revenue fell by almost 30 percent.
As I’ve written before, AOL is like a train running down a track that is disintegrating rapidly underneath it. That track is the dial-up access business, which still produces gigantic amounts of revenue — close to 40 percent of the company’s total — but is declining at a rapid rate. What Armstrong is trying to do is to build new businesses that have the ability to generate similar kinds of revenue, which amounts to laying new tracks quickly enough that the train doesn’t go hurtling into an abyss. The launch of Patch was one such attempt, and the acquisition of The Huffington Post was another.
The purchase of Arianna Huffington’s content-aggregation business is part of the same strategy that has taken AOL into the celebrity circus of Hollywood. One of the things the web giant has lacked on the content side is identifiable personalities, and that is clearly something the Huffington Post founder brings to the table. Huffington’s site started as a collection of blogs written by famous people from various walks of life who were drawn together by their friendships with Huffington herself, and celebrities continue to make use of the site as a personal blogging platform when they have a cause they want to push.
Huffington, who is now in charge of all AOL’s editorial content, is also in charge of the Hollywood operation. All she has to do now is turn all those celebrity websites into cold hard cash for her new boss before AOL runs out of track.
Related GigaOM Pro content (sub req’d):
- How Media Companies Can Compete Online
- What We Can Learn From the Guardian’s Open Platform
- The Near-Term Evolution of Social Commerce
Post and thumbnail courtesy of Flickr user Zert Sonstige
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