Create more value than you capture

Jun 15th

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

  1. 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
  • reinvest profits into building content & social relationships that get network effects on your site
    • feature your best content so it is easy to find
    • interact in the community
    • ensure your domain name and design add credibility to your content
    • create interactive or viral components that raise brand awareness even if they do not create direct revenue streams

    Content & Culture for a Dollar

    May 15th

    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.

    If you are a member of our community I wrote a post about why I think Google Friend Connect is a bad idea for most web publishers.

    Andrew Johnson has a good post on why Yahoo! as a content company is a failing strategy. While Google and Amazon are expanding in many directions, Yahoo! is forced to contract due to their high editorial costs.

    Mozilla Corporation may create a service around aggregating usage data. Yet another great example of giving away something and building value around it.

    Effective & Scalable Automated Content Generation Strategies

    Apr 16th

    For years there have been a wide array of automated content creation solutions, from RSS recycling wordpress plugins, to open source content generators, to fake science paper generators, right on through to custom high end programming jobs used by financial firms like Thompson Financial.

    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, 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?

    The best publishers are focusing on building large growing communities. Content is becoming a commodity, as content without subscribers is worthless. As failing mainstream publishers follow in Mr. Parker's footsteps, small publishers stand no chance to compete unless they have an army of brand fans.

    3 Tips to Kill Passive Verbs & Wasted Words

    Apr 16th

    One of my worst writing habits is writing filler text, the most common offense being passive verbs. Here are the 3 things that help me write clearer using fewer words:

    1. Read every day. We emulate what we consume. When I go months without reading books I can feel my writing getting looser. Many great authors, like Stephen King, also offer free writing tutorials.
    2. Stylewriter highlights writing errors. It costs $150, but is cheap if you want to write for a living.
    3. Twitter offers 140 characters. Many 160 character messages fit in 140 characters when optimized.

    What are your favorite writing tips & tricks?

    How to Sell Remnant Ad Inventory

    ESPN recently decided to stop selling remnant ad inventory via automated ad networks / exchanges.

    "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

    1. set a floor price on house content and show fewer ads to offer a better user experience
    2. 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
    3. Advertise branded widgets that go on third party networks which help get your brand exposure on those as well. ESPN should have made an official NCAA bracket gadget rather than letting that traffic and branding and traffic go to Google
    4. 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
    5. 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.

    The Economics of Credibility

    Mar 27th

    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

    The Daily Show

    The Daily Show With Jon StewartMon - Thurs 11p / 10c
    In Cramer We Trust
    Daily Show Full EpisodesPolitical Humor & Satire Blog</a>The Daily Show on Facebook

    Fox Business Ad

    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.

    Official - Mahalo is Spam, According to Google's Internal Spam Documents

    Mar 21st

    Google's leaked documents defining spam state:

    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 legacy continues.

    The Blend - 2008 Online Publishing Business Strategy

    Mar 20th

    John Battelle riffs on how Yahoo!, Microsoft, and AOL are screwing up by following in Google's footsteps trying to create huge ad platforms, while ignoring their brand ad strength. And AdAge asks if we may one day see a web free of push display ads.

    If traditional ads become less effective, we will still end up trusting ads that are links that look just like content. How to article linkbait, user generated content, and 100% blended affiliate links now make up the Mahalo business model. Which is really no different than the affiliate marketing Jason despises. That really puts a new perspective on somebody lashing out at SEOs and affiliate marketers before creating something that aspires to be more polluted.

    [UPDATE: Yahoo! Search also is getting into the blend more aggressively, allowing brand advertisers to drive potential customers to branded Yahoo! Search results. More information on Search Engine Land, and an example Y! search for Honda here.]

    The Future of Selling Media Online - Free then Pay for Popular Content

    Mar 18th

    Select Distribution

    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.

    Sliding Price Scales Starting at Free

    Seth talked about taxing latecomers by making events expensive at the end and cheaper for the first few people. And music is priced this way on Amie Street. It is basically the concept of Piracy is Progressive Taxation flipped on its head - make it free to build awareness until people really value it, then let the irrational herd follow along for the ride.

    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. :)

    Is Your Content Solving Symptoms or Fixing Problems?

    Feb 26th

    A normal business practice is to treat symptoms as problems and come up with a wide array of bogus solutions, but content that asks why actually solves problems and creates real value.

    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.


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