new media – Page 3

A Tale of Two Audiences

Disclaimer: the following is simply a hypothesis, a story if you will. I submit it to you with no pretension of either originality or authority.

When content companies look at their incoming traffic, they divide them into two general categories–referral traffic and direct traffic.

They’re both fairly self-explanatory. Referral traffic comes from people who found you from somewhere else. The biggest category of this in general is search traffic, but links from Facebook or Twitter, or someone’s blog are also typical sources.

Direct traffic, as the name implies, is made up of people who go directly to the site. Often this means that they are loyal followers of your content.

A loyal user is much more valuable than someone who finds an article of yours from Google, gives it a look, and then never comes back again. They’re more valuable in the quantifiable sense that they see your ads a lot more than that drive-by search user, but they’re more valuable in less obvious ways as well.

The vast majority of the traffic to the big content sites is referral traffic. While the individual user may be less valuable than the individual in direct traffic, the total amount of revenue from referral traffic is much larger. This is the reason that the internet is rife with SEO spam and headlines that are more likely to get clicked if tweeted. Search traffic alone is a gigantic pie, and empires have been built on it alone, with practically zero direct traffic.

However, having a loyal user base that comes to your site regularly is extra valuable precisely because it is likely to get you more referral traffic. Consider: loyal users are more likely to share a link to content on your site from Twitter, Facebook, Tumblr, Redditt, or a good old-fashioned blog. This is exactly the kind of behavior that generated referral traffic–both directly from people clicking those links, indirectly from those people possibly sharing the links themselves, and yet more indirectly if they link from their blogs and thus improve your Google ranking.

Of course, even within your loyal base there is variation in how valuable a particular user is. Guy who has read the Washington Post for forty years and has just moved online is less valuable to the Post than someone like Mark Frauenfelder, who might link to one of their articles on Boing Boing, improving their Google ranking further and sending some of his traffic their way. But it’s still useful to think broadly about direct traffic vs. referral traffic.

The Porous Wall

Back in March, the New York Times launched something like a paywall. There are numerous particulars and exceptions, but the long and short of it is that someone like me, who only ever visits the Times when someone I know links to it, faces no wall of any sort. Meanwhile, someone who has loyally visited the Times every day for years will have to pay if they want to see more than 20 articles a month.

At the time, Seamus McCauley of Virtual Economics pointed out the perverse incentives this created: the Times were literally punishing loyalty without doing anything to lure in anyone else. Basic economic intuition dictates that this should mostly result in reducing the amount of direct traffic that they receive.

The Times did spend a reported $40 million researching this plan, and while I’ll never be the first person to claim business acumen on the part of the Times, you have to think they did something with all that money. As usual, Eli had a theory.

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Imagine, for a moment, that all of the Times’ direct traffic was composed of individuals who were perfectly price inelastic in their consumption of articles on nytimes.com. That is, they would pay any price to be able to keep doing it. Assume, also, that all of the Times’ referral traffic was perfectly price elastic–if you raised the price by just one cent, they would abandon the site entirely. The most profitable path for the Times in this scenario would be, if possible, to charge direct traffic an infinite amount to view the site, while simultaneously charging the referral traffic nothing so they keep making the site money by viewing ads.

The reality is a less extreme dichotomy–though I wouldn’t be surprised if a significant fraction of the Times’ referral traffic did vanish if they tried to charge them a penny. Still, the direct traffic, while undoubtedly less elastic than the referral traffic, is unlikely to be perfectly inelastic.

Getting a good idea of just how inelastic would be a very valuable piece of information for the Times to have, and I think Eli is right that that is exactly what they spent the $40 million on–that, and devising the right strategy for effectively price discriminating between the two groups.

It’s too soon to tell if the strategy will work for the Times, or if it’s a viable strategy for any content company to pursue.

Come One, Come All

2011 also saw the birth of a new technology website, The Verge.

The Verge began after a group of editors from Engadget left, in the spirit of the traitorous eight, because they believed they could do it better than AOL would allow them to. During their time at Engadget, they had developed a following through the listeners of their podcasts and their presence on social media–Twitter in particular. They also were fairly active in the comment sections of their own posts.

In order to bridge the gap between the launch of the new site and the departure from the old one, they set up a makeshift, interim blog called This Is My Next, and continued their weekly podcast. This kept them connected with the community they had built around them and allowed them to keep building it while they were also working on launching The Verge.

There are a lot of things that I really like about The Verge. First, they bundled forums into the site and gave people posting in them practically the same tools that they use for the posts on the main site. The writers themselves participate in the forums, and any user’s post that they find particularly exceptional they will highlight on the main site and in The Verge’s various social network presences.

Second, they do a lot of long-form, image and video rich, niche pieces that may take time to get through but which just have a kind of polish which is rare among web-native publications.

When I told a friend of mine about how much I loved these pieces, he very astutely asked “but it costs like eleven times as much to make as a cookie-cutter blog post, and do you really think it generates eleven times more revenue?”

This question bothered me, because in a straightforward sense he seems to be right. Say that Paul Miller could have written eleven shorter posts instead of this enormous culture piece on StarCraft. There is no way that The Verge made eleven times as much in ad revenue from that post as they would from the eleven shorter posts he could have written.

But posts like that one attract a certain kind of audience. I may not read every long feature piece that The Verge does, but I like that they are there and I read many of them. The fact that they do those pieces is part of the reason that I made them my regular tech news read rather than Engadget or Gizmodo.

In short, the clear strategy being pursued by The Verge is to reward their most loyal audience, even if it doesn’t directly result in more revenue than trying to game search engines. There isn’t always tension between the two strategies–one of the sites features is called story streams, pages like this which make it easy to see how a particular story has unfolded so far. It also is one more page that could potentially show up in Google search results.

Still, having followed the group very closely at Engadget first, and now at the Verge, it seems clear to me that the core mission is to build up the loyal visitors. If a feature piece costs eleven times as much as a shorter one, but makes a loyal reader out of someone who indirectly brings 100 visitors to the site over time by sharing links on Twitter and Facebook, was the feature piece profitable?

The Verge is even younger than the Times’ paywall, so time has yet to tell if their approach is sustainable.

Farming Referral Traffic

At the onset of 2011, a big rumble was building in the tech community about Google’s search quality. Many claimed that it had become filled with spam. Google was not deaf to these criticisms, and argued that spam was actually at an all time low. The problem wasn’t spam, they argued, but “thin content”–and what have come to be called content farms.

The logic of the content farm is that with enough volume, enough of your pages will make it high enough in search results to get you enough referral traffic to make a pretty penny. In short, a content farm focuses its efforts on acquiring referral traffic and foregoes any real effort to build up direct traffic.

This in itself isn’t a problem, of course. If you have 500,000 of the greatest articles ever written by mankind, then you, Google, and search users are all better off if you rank highly in relevant search results. And many companies that took a beating when Google began targeting thin and low quality content for downranking have cried that they were unfairly lumped in with the rest just for having a lot of pages.

The content farm controversy aside, there is a clear and obvious place for a site that has an audience made up almost entirely of referral traffic–reference sites. Wikipedia, for instance, at one point received somewhere in the neighborhood of 90 percent of its visits from referral traffic. Though it is probably the biggest receiver of search traffic, it is not unusual in this regard–there is a whole industry of people whose livelihoods are made or broken by the various tweaks of Google’s algorithm.

The Path Forward

As I said, much remains uncertain. Five or ten years from now we’ll look back and be able to say which experiments proved to be the models for striking the balance between these audiences. For my part, I can only hope that it looks more like what The Verge is doing than what the New York Times is trying.

On Being Public

When I read Clay Shirky’s Here Comes Everybody, or Kevin Kelly’s What Technology Wants, I was confronted with some truly big think ideas that took me a few months to really digest and get my head around after I had finished them.

Reading Jeff Jarvis’ Public Parts, by contrast, felt more like continuing a conversation that had been going and would continue well after I finished the book. In part this is because I listen to This Week in Google every week, and watched as Jarvis formulated the idea for the book and gradually became chief publicness advocate on the show.

But I had also been having discussions on this subject on my own. When Google+ first launched on an invite-only basis, they were looking for all the feedback they could get. The whole concept behind circles was to give people maximum control over their privacy with the minimum possible effort, in response to concerns expressed about Facebook, not to mention Google itself. The debates that took place those first couple of weeks made me eager for Jarvis’ book to come out–so many people put so much stock on the importance of privacy, without taking into account the value of being public!

Jarvis has been practicing what he preaches for some time, talking openly about his prostate cancer and the unfortunate side effects of the treatment on his blog. One complaint that people have about this is that most of his readers subscribe to his blog to read his commentary on media, and don’t want to hear about his surgery-induced impotence. But Jarvis argues that he, personally, got value from being public, because he received a ton of feedback from people who had experience with what he was going through and were able to give him advice.

Morever, there is a social benefit to talking about such things in public–now, anyone who has prostate cancer can find Jarvis’ blog posts on the subject–as well as all the helpful comments on them–simply by searching on Google.

Jarvis doesn’t discount privacy, but he does think there is a dearth of publicness advocates relative to the big privacy advocacy industry that has cropped up. Since participating in those discussions on Google+, and reading his book, I have begun to look at things through the lens of the value of being public.

The recent Hyperbole and a Half, Adventures in Depression, is a perfect example. I have a lot of friends and family who have suffered through depression, but I haven’t lived it myself. The writer of H&H gave someone like me an insight into what it is like that I had never had. At the same time, the people I know who have experience with depression universally seemed glad that someone had so perfectly, and humorously, described what they have gone through.

For those of us who don’t command the kind of audiences that Hyperbole and a Half or Jeff Jarvis have, there is still plenty of reason to be public. You may not even realize who cares about the events in your life and is willing to make an effort to support and encourage you if you limit the people you share with. When my friend Kelly wrote this very brave and very honest post about what she’s been going through, she received some very wonderful feedback from an unexpected source, and it made her day.

This doesn’t mean that everything needs to be made public all the time. But it’s important to take the value of being public seriously, and to think hard about how you present yourself in public.

I created this site, under this domain, on a server I pay for, because as I was reading Jarvis’ book I started to rethink the way I was conducting my public life. I have no problem with my various social network profiles, and Blogger blogs, showing up when someone Googles me, but I wanted to have one site that I owned from beginning to end, under nothing but my own name. I don’t think everyone needs to do this, but I do think it’s something everyone should consider–and something schools should be informing students is an option.

So how could you benefit from being more public?

Innovation will Bubble Up from the Long Tail

I recently wrote that the long tail of digital content producers–that is, the vast majority–will make nearly nothing in revenue. This is especially true when compared to the head of the tail, the tiny fraction of content producers that will earn the vast majority of the revenue. By this I did not mean that the long tail was unimportant–in fact, I believe that the long tail is the most important segment, because that is where the future can be found.

Social Trial and Error

Societies progress through continual and parallel processes of trial and error. Small groups adopt products or activities or norms, a subset of which are picked up by larger groups, and even smaller subset of which goes on to yet a larger group. This process continues until only a tiny fraction of the original products, activities, or norms go mainstream.

An enormous number of trials end up discarded before a single one makes it to even a middle level of adoption, much less the favored few that go mainstream–or stay there long.

This phenomena, well documented in the diffusion of innovations literature, is most familiar to people in the fast moving world of consumer technology, where phrases like “early adopters” are used in casual conversation. It applies to anything that could proliferate across groups–for example, art, and content more generally.

A Hotbed of New Ideas and Failure

An unknown, aspiring writer in today’s world faces the same problem as any unknown, aspiring writer did in generations past–obscurity. He has many more tools at his disposal than his equivalents in the past did–he can start a blog, podcast, and connect with others on social networks to promote his work. There are also many, many more places he can submit his work–there are still magazines in the traditional sense, but there are many more online outlets of widely varying audiences.

These tools are available to any aspiring writer, however–in fact, the barriers to putting out your writing in public are so low that huge swaths of people who wouldn’t have even tried in the past are also putting their stuff out there. If anything, the web and the new opportunities it affords have actually reduced the probability that any one aspiring author will make it big.

If they want to set themselves apart, they will have to innovate. Of course, as touched on above, most of these innovations will fail to gain any traction. The new and exciting things happening in writing, however, will come from the successful subset of these innovations.

Scott Sigler is an example of a successful innovator in digital writing. After losing his book deal ten years ago, he learned about podcasting and decided to record and serialize his book himself, and put it out for free. He continued to do this after the first book, and eventually had built up a big enough audience to catch the attention of Dragon Moon Press, a small independent publisher. On the strength of his online following–who helped not only with sales but with marketing the book–the book managed to rocket up Amazon’s bestseller list. This caught the attention of Random House, with whom he currently has a contract. His second book with them was a New York Times bestseller. He isn’t selling Harry Potter-level blockbusters, but he has definitely moved up out of the long tail and into the head.

Sigler wasn’t the sole creator of the podcast novel; others were trying it out at basically the same time. But Kevin Kelly has documented how innovations and ideas tend to occur in parallel in art, as well as in science, math, and technology.

The podcast novel is a great example of how this dynamic works, too, because while it helped launch the careers of Sigler and some of his peers, the form itself has yet to become anything like mainstream. It has grown over time, but Podiobooks.com, one of the largest repositories for podcast novels on the web, still boasts a mere 569 titles, and a registered audience of 83,000. If you asked a random individual, even a random book enthusiast, odds are extremely low that they would have even heard of podcast novels.

Most innovations never make it even this far–but there is still no guarantee that podcast novels will get to the level of mainstream adoption, or even mainstream awareness.

The Head of the Tail is Conservative

The big record labels, publishing houses, and movie studios will never try something truly new. I am confident on this point–anything that is celebrated as being new from these big institutions will in fact just be the first time that big money has been spent on a form that was tried out first by individuals in the long tail.

It makes sense–a lone writer, musician, or filmmaker is working with a very small budget. In a writer’s case, they may pay next to nothing and face an opportunity cost made up primarily of their time. If they try something new and different and it fails, they may be out a few months of work. A big publishing house, on the other hand, has to pay the salaries of its army of editors, not to mention the costs of promoting a work. In dollar terms at least, failure hurts a publishing house a lot more than it hurts the lone, unknown author.

And publishing houses still fail more often than they succeed. They just win really big when they do win, and that subsidizes the failures. Profitably depends on their ability to increase the fraction of the authors they sign on who end up being successes, and minimizing the failures.

For that reason, they are always going to stick to the tried and true. Innovations will have to gain widespread adoption in the long tail–and for a while–before they bubble up to the head.

Consider the movement towards ebooks. The formats that Amazon, Barnes and Noble, and Apple are providing consumers are essentially nothing more than the digitization of the print versions. They do not offer the increased capabilities that digital technology makes possible–of including video and audio files mixed in with the text, for example, something commonly done on blogs. They optimize for the tried and true, because all the money is being invested in the tried and true.

Mechanisms exist for making money from innovations–you could pitch an idea beforehand on Kickstarter, or make an app for smartphones and tablets and charge a price for it. Only after a respectable amount of money has been made by innovators will the institutions at the head of the tail start to take notice.

So while I don’t agree with Chris Anderson’s original hypothesis that the long tail will be of increasing monetary significance to businesses, I do think that it will be an even greater engine of innovation in the digital era than it was in the analog one.