Tim O'Reilly thinks the web is much bigger than search, and actually likes the Yahoo! deal. I think it is easy to overlook how Google is quietly winning marketshare in many non-search markets - and how they can easily build such positions using their brand recognition & distributed ad system. A throw away quote from Tim's post is the title of this post:
At O'Reilly, we always say "Create more value than you capture." All successful companies do this. Once they start capturing more value than they create, their market position erodes, and someone displaces them. It may take a while but it happens eventually.
Two of the easiest ways to ensure short term growth are to
undermonetize to ensure you have a better user experience worth talking about
create some content that is easy to monetize aggressively, and leave most content clean and pure while only monetizing the most profitable content
use ad units that do not look or feel like ads, and/or ads that add value to the experience
Amazon just created MP3 clip widgets that pay 10% payout on MP3 downloads. You can create a list of your favorites as content, while displaying ads. Those who run large communities may be able to make a decent income selling culture.
The downfall of most automated content solutions is the perception that because it is automated it is spammy. But that perception may have changed recently, when the NYT published an article about Philip M. Parker. Mr. Parker created a sophisticated set of algorithms which has allowed him to automatically generate over 200,000 books.
He points out that once he has trained the computer to take data about past sales and make complex calculations to project future sales, each new book costs him about 12 cents in electricity. Since these books are print-on-demand or delivered electronically, he is ahead after the first sale, he said.
This video explains a bit more of the process
And when it comes down to content quality, a person who reviewed one of the books on Amazon.com, stated
“The book is more of a template for ‘generic health researching’ than anything specific to rosacea. The information is of such a generic level that a sourcebook on the next medical topic is just a search and replace away.” ... Mr. Parker was willing to concede much of what Mr. Pascoe argued. “If you are good at the Internet, this book is useless,” he said, adding that Mr. Pascoe simply should not have bought it.
So this is a case of self-proclaimed substandard production, and because he is first to market it is fine. But the profit margins are probably bigger than Google's. The commercial web is just over a decade old and this sort of technology already exists. Where will automated content generation be in 5 years? In 10 years?
"We're heading down a path where it no longer suits our business needs to work with ad networks," said Eric Johnson, executive vp, multimedia sales, ESPN Customer Marketing and Sales. Sources say that ESPN would like to rally support from other publishers behind this move and ultimately tamp down ad networks' growth. Turner's digital ad sales wing is rumored to be considering a similar move, though officials said no decisions are imminent.
The two logical options from there are
set a floor price on house content and show fewer ads to offer a better user experience
look at currently hot stories, key markets in the weeks and months ahead, and market positions where you are close to leading but do not yet dominate and advertise your own products and services
add interactive features to your own site which increase brand loyalty and reduce content creation costs...which end up making the ad networks a more viable offering for back-fill content
If the ad networks are too cheap buy out inventory on competing sites to further distance yourself from them as the market leader.
All of those strategies allow you to buy market-share in your vertical on the cheap. The more of your market you own the better you will be able to sell ads for. If ESPN was 60% of the sports market Nike would be required to buy ads with them, largely based on ESPN's terms. Part of being remarkable is about creating featured content, but an equally important piece is making sure you are branded as the leading source. There is no better place to market your content and ideas than your own site.
Everyone who is popular gains detractors along the way. And detractors tend to flock together and vote for other people who share their opinions. That trend virtually guarantees any valuable brand will have dirt ranking somewhere in the search results. The more valuable the brand gets the more people who will gun to unearth the dirt.
With so much competition for attention, many publishers believe they need to offer bold predictions quickly in order to be remarkable. And when those predictions go wrong people are creating documentaries about how wrong you are. Jim Cramer recently mentioned that Bear Stearns was fine right and talked about how unsophisticated the naysayers were (and how they never did their homework)
Days after Jim said Bear Stearns was fine, they were bought out for pennies on the dollar. Not only does Comedy Central offer their take, but other mini-documentaries and flames have appeared
If you are a publisher and your business model requires you to find new customers every day then you need to keep competing for attention. In many markets that will put you in a Jim Cramer-like position where you end up making some bad calls that cost you a lot of money in the long run.
Final Notes on Spam
When trying to decide if a page is Spam, it is helpful to ask yourself this question: if I remove the scraped (copied) content, the ads, and the links to other pages, is there anything of value left? if the answer is no, the page is probably Spam.
Lets take a look at a typical Mahalo page
That page has a #1 ranking in Google with 0 unique content and 0 value to the searcher (according to Google's above guidelines).
How can Jason Calacanis create a site that poor while slagging off everyone else as a spammer? *None* of my sites fit Google's internal webspam guidelines anwhere near as closely as Jason's site does here. Will Google engineers make the right call on this spam site? Only time will tell. And the results will be quite telling, especially when inline affiliate ads further pollute this page. The Jason Calacanis spam legacycontinues.
I recently mentioned the Sigur Rós Hiema video, which was featured on the YouTube homepage for a day and probably got about a million pageviews. An SEO Book reader named Satish discovered that after the video built up a lot of viral media and link exposure the video was set to private mode.
Google video, as a DRM service, failed miserably. But providing custom hosting for member videos that can only be viewed from certain sites or for a certain number of views is an easy win for YouTube if/when they decide to do so. Google already owns Checkout, so it should be easy to do after they have the right relationships in place.
I predict that if that limited syndication model is available to the masses, a future media pricing system will allow publishers to offer free video for the first X views and then the videos are turned to private / members only / payment required after they get a certain number of views. All the free views build the perceived social value, while being easy to market since the content is originally free.
Word of Mouth is the Best Long-term Marketing Strategy
The free then paid model encourages the creation of remarkable content and ensures artists and authors are paid a fair market value for their best work. And it offers a profound business model strategy because as markets saturate marketing gets more expensive and attention gets more scarce - the easiest way to do marketing is just make it easy to use, consume, and share - and rely on word of mouth to do the marketing. And it is far better than monetizing via advertising because it is more organic, and stems from the web's strengths. As Jakob Nielsen said:
"The basic point about the web is that it is not an advertising medium. The web is not a selling medium; it is a buying medium. It is user-controlled, so the user controls, the user experiences."
When there is an unlimited amount of competition consumers are far more likely to buy what is already well trusted amongst the community.
This Type of Technology is Easy to do
The cool thing about my current content management system set-up is I can control permissions for any article on this site. It could even be automated for certain classes of information (ie: only pages, only blog posts, only book pages, only on newsletters, only on a subdomain, sitewide, etc.) ... it is entirely flexible.
You wouldn't want to bait and switch everything you did or you would build up some serious negative karma and some people may not be willing to link at you, but most people will not care or notice. The attention comes and goes, but the links stick. If you turned 10% to 30% of your well loved featured content into premium content I doubt it would hurt your link building much, although your rear end might get sore from your wallet filling up with cash. :)
Once you look at content creation from that perspective, there are a lot of great content ideas that you will not find on many competing sites simply due to limitations tied to their business interests, or their lack of interest in providing real value to the market.