We're very skeptical about the scale argument, as you might expect. There's a lot of aspects to this subject that are not very well understood.
So in all of this stuff, the scale arguments are pretty bogus in our view because it's not the quantity or quality of the ingredients that make a difference, it's the recipes. We think we're where we are today because we've got better recipes and we have better recipes because we spent 10 years working on search improving the performance of the algorithm.
We don't have better algorithms than anyone else. We just have more data.
And this is why you see so many hucksters hyping trash, committing fraud, scamming users, cutting corners, and working legal loopholes at launch time to try to grow marketshare *at any cost*
Build the scale and you have the cashflow and feedback mechanisms in place to test viral marketing strategies, improve conversion rates, increase real (and perceived) relevancy, and lock in users.
"In a July 19, 2005 e-mail to YouTube co-founders Chad Hurley and Jawed Karim, YouTube co-founder Steve Chen wrote: 'jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.'"
"Our dirty little secret... is that we actually just want to sell out quickly," said Karim at one point. In an e-mail, Chen talked about “concentrat[ing] all of our efforts in building up our numbers as aggressively as we can through whatever tactics, however evil.” - Ars Technica
Welcome to the exciting world of innovation in online media!
Without brand you have nothing.
With brand even a wounded duck full of unauthorized scraped content like YouTube or Mahalo somehow manages flight, at least for a while. Then you only need to find someone dumb enough to buy the growth story and purchase the bag of smoke before the fire emerges.
Of course people don't have to cut corners, lie, cheat, and steal to build a real business. Those are the strategies employed by people trying to sell value where none exists. You can do just fine by dominating a small niche THEN leveraging data to grow. It is not sexy. You probably can't hype it to the media. It might not lead to an 8 or 9 figure payday. But then you won't have to describe your strategy as "whatever tactics, however evil.”
Relevancy is a good thing. It makes search and the world more efficient. Many attempts at relevancy, like search is getting more social, may just create more noise. But computers are getting better at understanding language is a good thing "our measurements show that synonyms affect 70 percent of user searches across the more than 100 languages Google supports."
But it seems each increase in relevancy justifies additional increases in irrelevancy to increase monetization.
Each individual piece sounds useful and helpful, but the end effect (and goal) is hijacking and misdirecting traffic to display more ads.
Even when you claim your own business listing, Google will show your customers recommendations of other competing businesses on your business profile page. One of the best advertising based business models is extortion. And while the sum of the pieces may amount to that, certain ad networks are clever in how they tie it all together to *appear* innocent, even when acting like a shark.
What does a spam site do? Scrape content, misdirect visitors, and hope to get an ad click. Look at the above sequence through the same lens. It is the same thing - eeeeeeeeeevil.
SEO is Evil, Except When I Am Selling It!!!!
And yet a lot of the largest online spam publishers / scraper websites are taking a page out of Google's book...call SEO professionals scammers selling snake oil, while building search arbitrage businesses based on stealing third party content and wrapping it in ads. Perhaps the goal of charlatan douchebags like Dave Sifry and Jason Calacanis are to promote the Google anti-SEO public relations messaging in hoping that Google will not burn their sites to the ground. It may well work.
A popular SEO figure who sold a content management system based on cloaking mentioned at a secret meeting amongst Google's spam team and top SEOs that he loves turning in spammers. If he didn't promote Google's misinformed view he probably wouldn't get away with a business model built on cloaking.
What are Technorati and Mahalo but glorified scraper websites? And yet to promote such trash they claim to be search evangelists fighting for the purity of the search results (while they scrape scrape scrape).
While publicly those people trash SEO, they sell SEO services, and a friend told me that they are even using high pressure telemarketing and email spam to pitch "services" ... one such message I was forwarded stated:
Thanks for taking the time to review our new and improved demo. I'm glad you liked it and I'm forwarding you the PowerPoint version for you to truly experience the animation. Once you've distributed to the right parties I can always hop on a quick call to go through the demo really quick to really emphasize the value as an SEO component which is what the end result really is. Along the way you reap the benefits of having great content, a social media platform that all work to SEO and drive traffic. So even if up front the value is hard to fit into the normal SEO purchase, think of it as SEO with bells and whistles.
And as long as Google continues to rank the main scraper websites from such companies, that provides the proof of value which sells the garbage content to big brands. And so the above pitch was made by you-know-who, and Demand Media is going to start selling content to old media sites "One example Kydd mentioned was Demand’s partnership with the travel section of the Atlanta Journal-Constitution, which, like most newspapers, is strapped for cash."
Quick question: what is to prevent Demand Media from partnering with hundreds of such media sites to leverage the combination of cheap labor, keyword earnings data, the media site's PageRank, and really just doing some serious damage to the search results? Unless the trend is altered, within 3 years almost any midtail to longtail keyword of value will have at least 7 of the top 10 results recycling the same poorly researched semi-legible informationless information.
All of the top Google search results say it is true. SO IT MUST BE!!!
“The basic idea of this contract,” he writes, “is that authors, journalists, musicians and artists are encouraged to treat the fruits of their intellects and imaginations as fragments to be given without pay to the hive mind. Reciprocity takes the form of self-promotion. Culture is to become precisely nothing but advertising.”
The above has been highlighted many times on this blog, but its damage has been far faster and far more widespread than even I anticipated.
The lingering effects of the economic recession, coupled with an expanding supply of efficient, and highly targeted online advertising networks, is reshaping the way big advertisers and agencies perceive the value of online media outlets. The result has been a pronounced polarization of the online advertising marketplace, with perceived demand rising for both the high-end of the most premium publishers and the low-end of ad networks and aggregators. This has caused perceived advertising value for the muddled middle of the marketplace - all but the most premium publishing sites, and the major online portals like AOL, Microsoft and Yahoo - to erode, as the ad industry focuses its attention on the top and the bottom players.
Those ad networks are (of course) full of fraudulent distribution which helps make them seem cheaper than they are, while leeching off the legitimate publishers and driving down CPM rates on legitimate media.
But as Demand Media saturates their site the returns lower and they are in need of more links to get more "content" indexed. And so they are promoting a business model based on incentivized publishing, which includes both "The more high quality links to your article there are on the web, the more highly a search engine will rank it" and "Your family and friends are probably curious about what you are writing anyway. Send them links and invite them to take a look!"
Given that those author's articles are hidden in the bowels of a large site (and that they are already being encouraged to build exposure), how big of a jump is it to assume that some of them will search for this or this? How many of them will create unofficial click rings? How many will ask friends to click an ad while they view it? How will Google be able to detect such activity given the big smokescreen such a large site provides? They can't.
Who does the rise of content scrapers help? Those who are involved in the manufacturing of bulk misinformation, search companies which pay people to steal content and wrap it in their ads, and those who sell subscription content (well, up until some of the above outfits buy subscriptions to those sites to re-write and dumb down the content). In some markets (where the market leader is clear and obvious and oftenly referenced on the garbitrage websites) the backfill junk content might also help develop a competitive moat between the top brands and weaker competitors. It might also help some people involved in analytics, as more businesses need to squeeze every ounce of profit to stay alive.
Success from scratch in many polluted markets will require more grit, more scars, and better differentiation. As robotic content fills the search results, people will likely gravitate toward the expression of emotions. At the same time some employers are trying to prevent employees from having the opportunity to get their hands dirty, leaving an opportunity for competing businesses who want the additional exposure.
Mark Cuban recently talked about how search engines and content aggregators are vampires.
There is no reason to be indexed in Google. ... You haven’t gotten anything back
But he failed to disclose how his Mahalo investment loots content.
If Google is a vampire (while sending away billions of Dollars of traffic for free) then what does that make Mahalo (which borrows your titles and abstracts as content to pull search traffic into their ad cluttered pages pages, while placing your content below the fold (while using nofollow on attribution links))?
Is the following accurate?
If you think otherwise, then please explain. ;)
Danny Sullivan TORE UP Mark Cuban in a must read article which only Danny could have wrote. It is well worth a read for anyone who wants to understand the hypocrisy behind the Mahalo position on content scraping / vampiring.
I was talking to a friend yesterday who was at a conference where Demand Media's CEO spoke, and he stated that nobody asked the big question: "what if google decides they don't like you anymore?"
Then I got thinking about how Google torched Squidoo after Jason Calacanis went on his public campaign to rebrand it as spam. But today under the same level of scrutiny, how is Mahalo (which scrapes millions of 3rd party content listings *without any editorial filter*) not spam? Squidoo at least donates $10,000 a month to charity. Mahalo just "borrows" your content without permission and keeps all the cash.
In the chat room, I said hello to teeceo, but I know the stuff that he was doing and it’s shoot-on-sight. I think anyone who is blackhat knows (or should know) that I’m happy to talk to anyone, but that we’ll still take action on the spam we find.
Imagine taking that approach to hunting search spam all day long, and then ignoring the *fact* that Mahalo is scraping millions of third party listings and using them as content with no editorial filtering.
Then I started thinking about why the Google spam team could ignore something as outrageous as Mahalo, especially when it was built by a guy who was a false anti-spam evangelist. Is it because Jason is a good guy? No. Is it because there is some actual editorial vetting of the content? no. Is it because Google is getting a cut of the AdSense revenues? Google doesn't need the short term cash flow (look at all the affiliate AdWords advertisers they just torched), so that is too cynical of a view.
Yes Google wants display inventory (their biggest opportunity for 2010 according to the quarterly call), and these "content" websites have already given themselves over to Google as inventory. But it must be something deeper than that. So I started thinking about it from a longterm strategic level...
Google won't penalize sites like Mahalo (even though they blatantly violate Google's guidelines) because Google *wants* to use the works of companies like Mahalo, Demand Media, and Aol to lower the value of other content and bankrupt a lot of the traditional media companies.
Why would Google want to do that?
There is excessive duplication in the marketplace. The faster that duplication is driven out of the marketplace the more desperate companies will be to cut deals with Google. And while there is a down market Google can drive companies out of the market and just claim that it was the economy that did it (much like how Mahalo used the down economy as an excuse to fire most of their editorial staff and replace them with content scraping robots).
Once a lot of media companies are bankrupted, the market is far more efficient, and there are fewer mouths to feed, that means Google can squeeze greater profits margins out of the media ecosystem by getting a fatter cut of the ad revenue.
Once it starts harming the Google brand then I suspect them to act quickly and decisively. And sites like Mahalo will see a sharp drop in traffic. Jason better milk it while he can. The clock is ticking.
On Hacker News, Melvin, from Web Design Company, had a great analogy on the Mahalo business model:
Let's use a different industry to illustrate what is happening.
Let's say a band named The Beatles records a new album. The local radio station gets a copy of their album and plays their song. The listeners love it so they play it more often, but they don't mention who the band is and on their website, they put up a link to download the song... but without any credits. Their audience grows. They get advertisers to advertise to their audience. They say, "hey, playing good songs gets us more listeners and more listeners gets us more advertisers, which gets us more $$. Let's do this more often." So they go do this 500,000 times, and each time never mentioning who the artist is. They grow and prosper while the artists starve.
Oh, in the mean time they call the artist scum.
In the above metaphor, the artists are the bloggers whose content Mahalo is using. The radio station ripping off the artist is Mahalo. The Federal Communication Commission is like Google, who is allowing all this to continue because the radio station is giving them a cut from the advertising revenue.
Hope this helps make it a little more clear why what they are doing is wrong, needed to get exposed and needs to get fixed.
The analogy isn't 100% perfect...but it *is* pretty darn close. :D
[Update: And it was so bad that Demand Media removed it from YouTube after I highlighted it, proving my point]
So remarkably bad, that I had to share it! :D
I don't know who Demand(ed) that Media, but could I please get my minute and six seconds back?
With 50,000+ views, that 1 video has wasted over a month of human life, so far. How many man-years are wasted watching such garbage? And yet they are just getting started! Demand Media's goal is to create a million pieces of "content" each month.
What do Youtube users think of that "content"?
Hmm....not impressed. If Google hates cloaking and machine generated content then why is trash that is handmade seen as being any better?
Does Google realize what they are funding? Do they even care if the web turns into a pile of junk? What will come of it?
[update: Matt Cutts contacted me and mentioned that this was due to the Vevo launch which occurred after that page was cached. Over time that means such pages like the one mentioned below should be purged from the Google search index.]
Google claims they try to be pretty fair with publishers and publishing business models. They are fine with indexing preview versions of a page and just showing a user that, you can make the full article free, you can make the first x clicks free.
OR you can put it all behind a paywall and not get any search exposure.
UNLESS you are Youtube.
In which case you can put whatever you want behind a subscribe wall, still have that registration-required/paywall content fully indexed in Google, and then force users to sign in to view the content.
On the cache copy of pages people still can view the pre-roll ads, but not the content :D
Search Google for "poker face", observe all the Youtube data in the search results, click the top Youtube listing, and watch them send you to a login page so they can better track you and target ads against you.
Many publishers that are having trouble figuring out search (from a business model perspective) would have no problem making a ton of money from search if they got the good ole home cooking treatment that Youtube currently enjoys (universal search promotion + cloaking forcing registration).
And this is where Google being rumored to acquire other content properties (like Yelp) becomes scary for users and publishers and advertisers alike.
To understand our position in more detail, it helps to start with the assertion that open systems win. This is counter-intuitive to the traditionally trained MBA who is taught to generate a sustainable competitive advantage by creating a closed system, making it popular, then milking it through the product life cycle. The conventional wisdom goes that companies should lock in customers to lock out competitors. There are different tactical approaches — razor companies make the razor cheap and the blades expensive, while the old IBM made the mainframes expensive and the software ... expensive too. Either way, a well-managed closed system can deliver plenty of profits. They can also deliver well-designed products in the short run — the iPod and iPhone being the obvious examples — but eventually innovation in a closed system tends towards being incremental at best (is a four blade razor really that much better than a three blade one?) because the whole point is to preserve the status quo. Complacency is the hallmark of any closed system. If you don't have to work that hard to keep your customers, you won't.
Open systems are just the opposite. They are competitive and far more dynamic. In an open system, a competitive advantage doesn't derive from locking in customers, but rather from understanding the fast-moving system better than anyone else and using that knowledge to generate better, more innovative products. The successful company in an open system is both a fast innovator and a thought leader; the brand value of thought leadership attracts customers and then fast innovation keeps them. This isn't easy — far from it — but fast companies have nothing to fear, and when they are successful they can generate great shareholder value.
Open systems have the potential to spawn industries. They harness the intellect of the general population and spur businesses to compete, innovate, and win based on the merits of their products and not just the brilliance of their business tactics. The race to map the human genome is one example.
But as soon as Google gets a market dominant position, you can bet on them locking it down to enhance ad revenues. The secret search relevancy algorithms, AdWords ad quality score, using AdWords rebates to push Google Checkout, always-on search personalization (even when logged out), mystery meat payout rates to AdSense publishing partners, universal search algorithms that allow them to arbitrarily promote their own websites, YouTube cloaking, etc etc etc
It looks like they jumped the gun on Yelp. Google was already integrating Yelp reviews in their AdWords ads before the acquisition was finalized.
What does it mean for the rest of us?
I am not sure.
It depends on if Google believes in what they say or what they do. They can't believe both.
Watching the big co. media vs Google interaction has been entertaining, largely because they claim search is an either/or game.
Matt Kelly, from the Daily Mirror, exclaimed how SEO was a dead end and how they were only able to grow by not worrying about SEO:
three months ago, we launched two new websites - and actually stripped out from Mirror.co.uk two of our core drivers of traffic; showbiz and football. Creating two new niche websites, built on very different platforms designed especially to show each off in their best light. And the hell with SEO. We we're chasing passion, here, not page impressions.
In the case of MirrorFootball, it is the ideal platform to combine our brilliant coverage of the British football with a unique collection of photographs and pages stretching back to 1903 - definitively the greatest British football archive in the world. With 3am, it is taking a unique brand and attitude of showbiz gossip and giving it the best possible platform online.
With these two new websites, I believe we have taken a very important first step - a very difficult first step - to put that sense of brand and value and character back.
How? By putting SEO in its rightful place as a tool to be used when appropriate
Brands Should Align With Interests, Not a Secret!
He claims the reason for the growth was not worrying about SEO, but nearly *any* smart & sophisticated SEO will tell you that if you have a couple sections of your site that are root drivers of traffic & repeat visits it might make sense to leverage your brand strength to create niche brands built around that passion.
Passion = readers + links + loyalty.
This is not some sort of new secret finding...it is why there are PROFITABLE magazines on water and running, and this is why passionate niche sites have done way better than many mainstream media sites IN SPITE OF Google preferring to promote the broad media oligarchy via promotion in Google News and the Google onebox.
SeoBook.com in it's original form was a blog in the bowels of another site. After our blog started gaining just a bit of traction I realized that it was worth turning into a separate brand and running with. I got on the web (commercially) in 2003, and making that shift was something I figured out...back in 2003.
Niche is the Easiest Way to Win Online
And anyone who cares and is passionate can own a niche. Maybe a small one to start, but over time it can grow. And even people with limited social skills can pull in quite a following if they can sell the illusion of success to others. On the announcement of his Open Angle Forum I told Jason Calacanas (which he didn't publish)
Nice strategy. I don't always agree with your public relations tactics, but (outside of being hypocritical) they are effective, and this launch is a good way to really start stamping a big footprint into the start up market. :)
If you own (or have interest in) the surrounding media ecosystem you can pump your own interests after investing in them. A sure way to ensure they get the right types of exposure & adequate public relations + PageRank.
You pick the market you want to play in, work at it for a few years, and you can do well enough to make a living. There are literally a million markets waiting for you (and more being built every day). And software keeps getting cheaper and more powerful. :D
Sharing Free Content Provides Social Proof of Value
Any doubt or uncertainty is a tax on profits. Nobody wants to do something stupid, and sites that have a public portion show social proof of value which lowers perceived risk. And if attention follows what is publicly accessible, then it is typically better to be the person commoditizing competing business models by giving something away, than to be the one getting commoditized. ;)
Paywall + General Purpose = Fail
When general purpose / unfocused media companies put up paywalls they will just commoditize their position on the link graph. Even if you are a paying subscriber AND you chose to link to content behind a paywall, most people reading your website would rather read your accounts and link at your accounts. On a large viral network content behind paywalls doesn't typically go viral.
This is not to say all media companies are stupid. Much of the anti-seo talk is just a combination of misdirection & posturing for self promotion. Deep down inside Rupert Murdock understands this, which is why he invested in leading media brands like the Wall Street Journal.
It looks like Matt Kelly, who wrote the above nonsense about putting SEO in its place, just got promoted. Also not a coincidence that his company (which claims not to care about SEO) actually employs outdated SEO techniques (like keyword stuffing) on the sites which are allegedly not concerned with SEO!
Some of these companies that claim SEO is somehow bad are not only doing SEO, but are also using spammy hyped up headlines which promise steak but deliver dog food. Headlines are the new bubble. How is that any better than pulling in traffic through the use of a relevant page title?
The first of those is a non-starter for any serious business enterprise. If you don't host it then it is much harder to control the business built around it (especially while leaking your intellectual property to a direct competitor).
Exploiting User Flaws for Maximum Profit Potential
Even better, the device knows who I am, what I like, and what I have already read. ...
Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I'd never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.
In a world where democracy is getting more participatory, it's very important that people are informed over a neutral medium so they can connect to whoever they want. Another issue that is very important is snooping. I don't want any snooping on my Internet traffic.
You can do things to ensure that my Internet runs smoothly, but when I am doing something which is perhaps very intimate: when someone looks up something to see if they have cancer, or a teenager wonders if they are homosexual or not and wants to go online to find answers, this should be private. So systems that monitor every click and build a profile of me are very damaging.
The things we do on the Internet are so intimate that they are much more valuable to others and damaging to me than having a permanent TV camera in my living room. I don't want my health premiums to go up if I look up health information; I don't want to be a suspected terrorist if I do research on chemicals, I don't want to get leaflets from gay rights groups if I look up something on sexuality.
At least we know why Eric Schmidt says "Advertisers are willing to shell out a lot of money for this targeting."
In the past I have vented email frustrations in many ways (and truth be told I am still way behind on email to this day) but I thought it would be worth sharing why forums are a way better business model than personalized emails for helping people.
I am not sure if all my thoughts and analysis are 100% spot on, but this is why I like private forums so much.
Instant Feedback on Value Perception
One of the first reasons is that you instantly have a yes/no answer on if the person values your time. If you are answering questions via email then the transition to paid support via email gets to be a bit weird...with people pushing for as much as they can possibly get for free, and you being the bad guy if you charge. By deciding to answer virtually no questions via email you help them understand that your time and your knowledge *ARE* your business model, and that if they value them they can pay for them.
Sure you can answer questions on if you might be a good fit, but anytime you here something that starts off with "have a quick question" followed by some very specific requests about their exact situation and website then that person will rarely convert....they are just trying to squeeze as much free information as they can.
Reciprocity = No Pikers Please!
A second major advantage of running a forum vs trying to help people via private email is that it filters out the pikers. Back when I would try to help people via email, I would get lots of questions like these...
I want to do something really spammy that could easily generate 6 or 7 figures of income. I want you to guarantee it will work, (and to be able to cast the blame on you if it does not).
Google just banned our site. I gave you $79. Fix it now.
I bought your book and was too lazy to read it. But since I gave you $79 I need to see at least $100,000 in returns. Map out my strategy. Oh and I have a $0 budget...as I already spent my $79.
I have a spammy direct marketing 1 page salesletter website that I need to rank #1 for "mortgage". I have no budget and am unwilling to improve the site or add value in any way possible, but this is no problem since you are an SEO.
I don't have very much money (or knowledge for that matter) but I took on some clients that I am charging a lot of money to and I need you to do the work that I am charging them a lot of money for.
Now most people wouldn't be quite as direct as the above...there would be flowery language to try to cloak the bluntness and absurdity of the proposition.
But the cool thing about our current business model is the above people have disappeared from the equation.
We can point people right to their areas of need if they are in need, and the people who would have the never-ending general stream of irrelevant questions don't exist. And the people who are reselling services (but want you to do ALL!!! the work) don't exist either.
I think the reasons for those are mainly reciprocity.
The person who is a no value add vulture will presume that others are just like them, and would be afraid to mention specifics in a community (where others see it). And if they are too generic then the answers can't be as specific as they otherwise would be.
The person who is too lazy to study would be too embarassed to ask the same questions over and over again without listening to your answers. And those who ask for general reviews are highly receptive toward feedback. There is the community element of it, to where if a person asks you to review their same site 4 different times and they haven't done a lot of the tips from review #1 or #2 people will tell them about it.
Another such example of the type of piker (who was around in our old business model, but no longer exists today)... one guy emailed me about how broke he was and how he needed his spam hype garbage single page salesletter sites to rank and he had already paid $79 for my ebook... etc etc etc
The SAME GUY was in a book my wife read a year later as a case study of a self-made internet multi-millionaire who made his money doing info-marketing. So he was a fellow info-marketer and he wanted 10+ hours of my time for under $80.
He didn't like it very much when I told him I could use some $8 an hour help in his profession!
Answers With In Depth Context
Via email people sometimes try to quite literally write chapters to me. And OFTEN then don't even listen to my responses...so it just ends up going astray. People don't respect what they don't pay for. They usually start off with "a quick email" but after 3 or 4 hours of work on my end the perception of "quick" often changes.
With email the only way to respond to email overload is to be short (and maybe sometimes blunt). Such interactions often lead to more confusion and/or some incorrect assumptions where people feel insulted in such. The community setting of the forum prevents that issue for me. Out of close to 100,000 forum posts we have only had anyone feel insulted less than 5 times (so far as I am aware anyhow, and I read every post).
The interactive dialog ensures questions get not just answered, but understood. Further, sometimes you are good at explaining something to person B but not so good with explaining it to person C. But if person B understands you then sometimes they can do a better job of conveying the issue to person C.
Have a Lotta Help From My Friends
Since the forum is closed to the public the incentive to spam it is lessened, while the quality of membership is increased (because people pay to be there).
There have been technical topics covered in the forums where I am not the right guy to answer them - AT ALL. And, because our community is diverse and has lots of helpful members, the people asking those questions get much better answers. And since many people are there questions are typically answered far faster than a person can do via email.
And as people invest more time into participating they only want to help more. Putting people in a social setting really helps the user/abuser types self-select out of participation whereas those who realize that they get more when the give more and participate more are able to learn so much more from it and get a great bargain, creating a virtuous cycle.
A Searchable Database of Answers
Over time the forums get better at collecting questions and answers in a variety of formats...which makes its internal search become more relevant over time.
Selling an Interaction
With my old ebook model I was selling something that could be copied. With the new model there is always change happening and always new things to talk about...so it is selling more of an interaction than a static product, and people only pay as long as they find value in being a member.
Less Reliance on Search
Anytime you have recurring subscription income then you are not so reliant on using search and other forms of push marketing. Sometimes just giving a really good customer experience is enough to help market your website.
And the Negatives?
There are not a lot of negatives to private forums as far as I see it, but there are some things worth thinking about, as no business model is 100% roses.
The first big risk is not hitting a critical mass. If you do not build it out to self sustaining then anytime someone joins they feel like they made a bad decision (since there is no/low activity).
Back when I had my ebook model I remember taking a two week European vacation. While I can still travel, it is much harder for me to unplug because there is work I have to do everyday. And it is tricky balancing what to do. Shall I participate heavily in the forums, write the newsletter, work on planning out some new SEO tools, create more training modules, etc. There really is an endless array of things to be done.
In some cases maintaining account permissions can be time consuming as well...especially if you discount the time it can take and under-price services. A couple ways to get around it are to try to charge enough to limit your size such that you don't have to worry about it too much, hire on help, add a support section to your site, and try to get people to sign up for longer periods of time.
The last tricky part is managing growth. If you grow too quickly it could lower the utility and quality of your site. If you grow too slowly then you risk the site fading into an eventual obscurity. How can you grow too slowly? Every type of membership site has a growth rate (and things that influence it) along with a decay rate (and things that influence it). If you are not improving the value of your site then eventually the decay rate overtakes the growth rate. So you keep needing to try to add more value.
Some people try to make membership sites seem like a set and forget revenue stream. If they aim to offer real value that can't be any further from the truth. The tricky part then is trying to maintain or grow the earnings of the business while also trying to maintain or grow the quality of the members. It can be quite challenging because most things that inspire quick growth also lead to a higher churn rate. And if you focus too highly on customer quality you can end up missing some of the better potential customers in the beginner portion of the market. That is a big mistake because
the beginner piece of the market is typically the biggest market segment in most markets
beginners tend to be more likely to spend (it is easier to deliver perceived value to a person who is unaware of everything that is out there than to a person who knows their options quite well, and this is especially true in markets with many software products)
the people who are experts today were once beginners (and are likely sticking with learning from many of the people they took too when they are beginners)
Google's relevancy algorithms have largely been driven by taking the "authority" shortcut. Have lots of other domains linking to your site? It must be good. Here is a golden ticket...your site ranks for everything.
That curbed some types of spam (by increasing the sunk cost needed to rank a new site), but it has taken brands only a few years to adjust to that hole in the algorithm. Witness the rise of answer spam, scraper re-purposing spam, social media recycling tools, freelance articles for a nickel spam, machine spun articles that are textually unique, etc etc etc
Increasingly, the biggest role of brand in search publishing is to legitimize stuff which might otherwise seemillegitimate and give them enough scale that it hopefully kicks off enough AdSense revenue that it matters to Google.
To appreciate the impact Demand is poised to have on the Web, imagine a classroom where one kid raises his hand after every question and screams out the answer. He may not be smart or even right, but he makes it difficult to hear anybody else.
The article (unlike most eHow articles) is well worth a read, but a quick summary...
buy up some aged well linked to sites (that were perhaps linked to when it was easier to get links with watered down content and before the web graph was as corrupted by $ as it is today)
create algorithms to mine their analytics data and Google's tools to estimate the earnings potential of any piece of content
pay freelancers crumbs to write write write based on whatever the algorithm spits out
run the content through a tool like Copyscape to verify it is unique
pay a reviewer ~ $1 to verify the article is (nearly) legible
keep refining and optimizing the above components based on feedback from earlier tests
create sister websites that are heavily cross-linked which host a second page about the highest earning topics
And in opening up their playbook to Wired, Demand Media likely created dozens of additional competitors who will aim to monetize the longtail of search via freelance articles of varying quality. Aol, headed by former Google executive Tim Armstrong, has been talking up a revolutionary media model to the media, which reads exactly like the Demand Media playbook:
The predictions, it says, are based on a wide swath of data AOL collects, from the Web searches people make on its site to the sites visited by subscribers to its Internet services.
The system is designed to track breaking news and trends and identify the best times to write about seasonal events, such as Halloween or Monday Night Football.
Based on these recommendations, the company's editorial staff, which totals about 500, will assign articles to a network of free-lancers across the country via a new Web site called Seed.com. AOL says it now works with about 3,000 free-lancers, but it is hoping to sharply increase that number through the Web site, which is open to anyone looking to submit a story. To cut costs ahead of its spinoff, AOL recently said it was cutting about a third of its total staff, or 2,500 employees.
If authors are going to get paid for performance on a freelance basis to churn out junk then they may as well spend a few months learning internet marketing, blogging, and Wordpress...if publishing is algorithm driven you don't really need to work for someone else to make a few Dollars per article. It is VERY easy to beat that, so long as you are willing to wait 3 to 6 months for your payout.
And the process of scaling automated low quality content generation is only going to make existing media channels reliant on search feel more pain. Dollars become dimes. Dimes become pennies. As traditional media companies go bankrupt companies like Demand Media and AOL will buy up the brands and fill the sites with more good content.
This not only will further harm traditional media models, but it will also pollute up the search results so much that...
it makes it hard to find quality information via search
private membership sites and paid niche content will become more popular
Google will either be forced to change their relevancy algorithms or make an example of a big company in the search (g)arbitrage game, or else searchers are going to have an awful experience over the next half-decade or so
I wish there was an Exchange Traded Fund which allowed me to place a bet on information pollution...until Google stops it, the profit potential will be too great for opportunistic "publishers" to ignore. It is a rare sure bet. And it is entirely up to Google to decide how big they want to let the bubble get before they deflate it.
Here is what the content revolution Tim Armstrong speaks of looks like:
Imagine 8 of the top 10 search results for every longtail query looking like THAT. And yet, it is about to become reality.
Those who know the least yell loudest. And Google is colluding with the likes of Demand Media and Aol to ENSURE every idiot has a megaphone. Ignorance is powerful.