The content business: Entertainment, or helping users make decisions?

Edited except from Zach Talks: A Conversation with Seeking Alpha Founder & CEO David Jackson:

Zach Abramowitz:
There’s a line in a recent post on your blog about engagement versus page view chasing. I can’t get it out of my head: “The problem is that high quality general news sites don’t have meaningfully higher engagement than sites which feature slide shows, link bait and viral content, because they don’t help users make decisions. They just have a higher quality audience.” I’ve watched TV shows & movies and read books and articles that are very entertaining — even if they didn’t necessarily help me make a decision. Why is it so important that content help users make decisions?

David Jackson:
There’s nothing wrong with entertainment. The question is: If you’re a content provider, do you want to be in the entertainment business? The entertainment business is tough, because there’s tremendous growth in supply of video, photos, music, text and games for desktop and mobile users. It’s hard to charge for content when lots is freely available, and ads have low engagement when the user is there for entertainment.

There’s an alternative for content providers: to be in the business of helping people make decisions. For example, our goal at Seeking Alpha is to help you make better investment decisions. When you’re helping users to make important decisions, they’re more willing to pay. And if an advertiser can suggest a compelling solution for what the user is trying to do, that’s valuable.

Some people think they’re not in the entertainment business, but in fact they are. Newspapers and news websites often fall into this category. They’re largely event-driven, often focus on personal experiences, and slip into simplistic narratives and memes — because those things create an engaging and familiar story-line for readers. They’re in the “infotainment” business.

If they were in the “we help you to make decisions” business, they’d operate very differently. They’d be more focused on data, provide more context around events, spend less time on personal experiences and anecdotes, and increase their coverage of societal changes rather than events. And they’d be more willing to embrace complexity when simplistic narratives don’t fit all the facts.

Facebook vs. Disqus — the scope of online identities

Edited excerpt from A Note On Anonymous, Pseudonymous, Guest, and Regular Commenters by Fred Wilson, and the comments in response:

Fred Wilson:
I do not think comment identities should always be mapped to a real name and a real identity. It’s great when they are. But there are many reason why that’s not a good option for some.

There is one thing that has evolved into a community norm that is important. Regular commenters use Disqus Profiles to comment here. The frequency of seeing the avatar next to the name in the comments breeds trust, respect, and in many cases real friendship.

If you want to hang out here on a regular basis, I encourage you to build a Disqus Profile, invest some time and energy into it, and participate as everyone else does. It’s how we do it around here and it is one of the many reasons this community works so well.

How a person looks or what they say their credentials are should not be a factor in determining if what they say is of value. Only what that say should be considered of value or not.

Many people, myself included, don’t want an avatar. We don’t want to be tracked by Disqus, and we especially don’t want to give someone an easy way to see where we hang out on the web.

(1) What should be the scope of your online identity? The options: (i) Maps to your offline identity, using your real name (= Facebook comments). (ii) Allows pseudonymity, but aggregates all your online activity (= Disqus). (iii) Allows pseudonymity, aggregates your activity within a specific community, but doesn’t connect to or aggregate your activity elsewhere (= Seeking Alpha). (iv) Zero aggregation — each comment is stand-alone.
(2) It’s important to understand the economic interests here. The more a service can track your activity, the more it can target advertising to you. Deeper tracking also enables greater proactive personalization and therefore allows services to become more valuable for users.
(3) My personal view: Consistency of identity is important within online communities. But linking users’ activity across communities is unnecessary and compromises their privacy. If you aggregate enough of a person’s online activity, it’s easy to identify their real name.
(4) Cf. If you’re in a mobile business, you’d better be thinking about privacy.

Should websites shut down comments?

Edited except from Zach Talks: A Conversation with Seeking Alpha Founder & CEO David Jackson:

Popular Science said that “Comments can be bad for science. That’s why… we’re shutting them off”. And Re/Code claimed that “social media is the new arena for commenting, replacing the old onsite approach”. But we’re seeing the opposite at Seeking Alpha. Many of our readers say they value our comments more than our articles. A team of researchers at Purdue University found something remarkable: when comments on a Seeking Alpha article disagree with the article (measured by average sentiment), the comments are more predictive of the future price of the stock being discussed than the article.

So why is there so much pessimism about text discussion on the web, and why are sites shutting off their comments? I think there are a two factors which determine whether your comment community will be valuable:

The first is: what do your users really come to do? Many people simply want to feel good about what they already believe in. So they come to websites to read articles they agree with, and to have shouting matches on behalf of their “team” with people they disagree with. They’re not open to learning or being persuaded. This phenomenon afflicts areas like politics and climate change. The comment sections on those sites become toxic.

The second factor that determines whether comment communities will be valuable is that they need to be nurtured. I think many websites get this wrong. They think that once you have comments, every commenter has a right to free speech on your website. They don’t. You need to view a comment community as a party you’re having in your home. Someone’s right to free speech doesn’t mean they can walk into your party and ruin it by shouting at your guests.

Moderating comments requires a meaningful resource commitment, which you’ll only make if you deeply believe in the value of comments.

What’s wrong with video

Except from Zach Talks: A Conversation with Seeking Alpha Founder & CEO David Jackson:

Here’s what we’re seeing in financial media: The current enthusiasm for video is driven more by revenue than by a sense that video is great for users. Many of the financial media companies we talk to are sold out of their video ad inventory. They’re trying to figure out how to get users to watch more video.

Well, it’s not surprising that prices are high for video ads, and demand from advertisers exceeds supply. If you force someone to watch a pre-roll ad, you have 100% of their attention. You’ll get sky high CPMs for that. The problem is that pre-roll ads are a horrendous user experience. Pre-roll ads are like going back to TV before DVRs. And they’re a lot worse than ads on web pages, which don’t stop or delay users from reading an article.

It gets worse. Many users want to watch short videos, so the ratio of the pre-roll ad time to the effective content time (before the user abandons the video) is often extremely high.

I think this explains why there’s huge advertiser demand for video, and not enough users watching it.

That’s not to say that video can’t be great for users, if we fix the ad problem. Video can provide context and important information that you can’t really capture with words. (Did you see the videos of the tsunami?) And video can be a great browsing experience.

But video isn’t great for everything… Imagine trying to do this with video.

Why websites shouldn’t optimize for page views

From What You Think You Know About the Web Is Wrong by Chartbeat CEO Tony Haile:

For 20 years, publishers have been chasing pageviews. The more pageviews a site gets, the more people are reading, the more successful the site. Or so we thought. Chartbeat looked at deep user behavior across 2 billion visits across the web over the course of a month and found that most people who click don’t read. In fact, a stunning 55% spent fewer than 15 seconds actively on a page. The stats get a little better if you filter purely for article pages, but even then one in every three visitors spend less than 15 seconds reading articles they land on.

The media world is currently in a frenzy about click fraud. They should be even more worried about the large percentage of the audience who aren’t reading what they think they’re reading.

Research across the Chartbeat network has shown that if you can hold a visitor’s attention for just three minutes they are twice as likely to return than if you only hold them for one minute.

The most valuable audience is the one that comes back. Those linkbait writers are having to start from scratch every day trying to find new ways to trick clicks from hicks with the ‘Top Richest Fictional Public Companies’. Those writers living in the Attention Web are creating real stories and building an audience that comes back.

(1) Pageviews as a metric is similar to monthly uniques, because neither put adequate weight on user loyalty. Pageviews from a passer by are counted the same as pageviews from a returning visitor. And monthly uniques counts someone who visits once a month the same as someone who visits 30 times that month.
(2) Our key metric at Seeking Alpha is daily, direct users. “Daily” gives you credit for returning visitors, and “direct” only counts people who come for your product and brand, not people who came because they were enticed to click on a syndicated or shared headline.
(3) Cf. (i) An insider’s view of what happens when you optimize for pageviews, (ii) Are advertisers responsible for pageview chasing by media websites?, (iii) Why pageview-driven websites succumb to herd-thinking,  (iv) The corrosive impact of pageviews as the target metric for content websites and (v) What happens when a content site stops optimizing for page views?.

An insider’s view of what happens when you optimize for pageviews

From Confessions of an ex-tech journalist by Bekah Grant:

When a story breaks, you could take a couple hours to do research, call to sources, and write a contextualized, edited piece — but by that time, 5 of your competitors will have posted on the story. You will look slow and readers will have moved onto the next thing. The reality is that original reporting and careful editing fall by the wayside in the desire to be fast.

Volume is also key. Most of the tech news sites post something at least once an hour and throughout the night, even when there isn’t news. Fresh content keeps people coming back to the site again and again, regardless of its quality.

The need for speed and volume is primary driven by one thing — pageviews. Pageviews are what sell advertisements, and advertisements are what keep most online publications running — particularly the small independent ones. Are they a good barometer for quality? No, but the reality of online journalism is that you need pageviews to survive.

In a perfect world, important stories would attract the most pageviews, but that is not the world we live in. Miley Cyrus and cat videos get more pageviews than stories about homelessness or healthcare. To write the stories you want, you have to feed the machine. And the machine likes junk food.

Is this the new age of massive media companies?

Excerpts from Is History Repeating Itself by Buzzfeed CEO Jonah Peretti:

Some smart people in our industry don’t think it is possible to build a huge new media company anymore. This pessimistic view is wrong because it is focused entirely on what has been lost (monopoly pricing power, etc) and ignores what has been gained:

1) Technology. Technology has replaced geographic- and spectrum-based distribution monopolies as a competitive advantage for publishers…  This [our tech platform] is a massive investment that is very difficult to replicate, and it creates a virtuous cycle where a growing number of talented people use increasingly powerful tools to do their job.

2) Scale. At the start of the golden age of publishing, a circulation of 1 million readers was considered large and even at the peak, reaching 10 million readers was considered a huge hit. Since those days there have been many exciting developments that have enabled a publisher to reach 10 times or even 100 times that scale.

3) Diversity of Talent. The early days of U.S. publishing were tough for anyone who wasn’t a white Protestant male living in the same city as the local paper. …times have changed; we can attract the best talent to our team regardless of race, ethnicity, or religion, and we can recruit beyond just New York in a growing list of global cities where we have expanded.

Why it’s a myth that banner ads don’t work

From What You Think You Know About the Web Is Wrong by Chartbeat CEO Tony Haile:

For the last few years there have been weekly laments complaining that the banner ad is dead. Click-through rates are now averaging less than 0.1%… If you’re a direct response marketer trying to drive clicks back to your site then yes, the banner ad is giving you less of what you want with each passing year.

However… if your goals are the traditional brand advertising goals of communicating your message to your audience then yes, most banner ads are bad…. but…. some banner ads are great! The challenge of the click web is that we haven’t been able to tell them apart.

Research has consistently shown the importance of great ad creative in getting a visitor to see and remember a brand. What’s less well known is the scientific consensus based on studies by Microsoft [pdf], Google, Yahoo and Chartbeat that a second key factor is the amount of time a visitor spend actively looking at the page when the ad is in view. Someone looking at the page for 20 seconds while an ad is there is 20-30% more likely to recall that ad afterwards…

Here’s the skinny, 66% of attention on a normal media page is spent below the fold. That leaderboard at the top of the page? People scroll right past that and spend their time where the content not the cruft is. Yet most agency media planners will still demand that their ads run in the places where people aren’t and will ignore the places where they are.

For quality publishers, valuing ads not simply on clicks but on the time and attention they accrue might just be the lifeline they’ve been looking for.

(Thanks to Patrick Murphy for the tip.)

What’s the best way to surface the truth: attempted objectivity or opinionated debate?

From The Future of the News Business by Mark Andreessen:

…there is an approach to how the news is created that also prevents progress. It’s the notion that “objectivity” is the only model worth pursuing.

The practice of  gathering all sides of an issue, and keeping an editorial voice out of it is still relevant for some, but the broad journalism opportunity includes many variations of subjectivity. Pre-World War II, subjectivity was the dominant model in the news business – lots of points of view battling it out in marketplace of ideas. As with people and opinions, there were many approaches to writing or broadcasting  on the same topic.

My take is that the rise of objectivity journalism post-World War II was an artifact of the new monopoly/oligopoly structures news organizations had constructed for themselves. Introducing so-called objective news coverage was necessary to ward off antitrust allegations, and ultimately, reporters embraced it. So it stuck.

But the objective approach is only one way to tell stories and get at truth. Many stories don’t have “two sides.” Indeed, presenting an event or an issue with a point of view can have even more impact, and reach an audience otherwise left out of the conversation.

Seeking Alpha articles are frequently criticized for being biased, because they’re written by investors who take (and disclose) positions in stocks. But we’ve discovered that opinionated debate by people with skin in the game is the best mechanism for surfacing and hammering out the key issues an investor needs to know about. This was confirmed by a recent academic study which showed that Seeking Alpha articles and comments are far better than sell side research at predicting future stock prices.

Why investors do better investigative work than business journalists and sell-side analysts

From Chris Roush:

In his history of business news, Starkman describes how reporters, dependent on insider sources to inform an élite audience of investors, practice a kind of journalism that is defined by access. News becomes a guide to investing, more concerned with explaining business strategies to consumers than with examining broader political or social issues to the public. Access reporting is friendly to executives because it relies on their candor. Starkman writes that during the crucial lead-up to the financial crisis, from 2004 to 2006, this news culture crowded out the kind of investigative journalism that might have inspired reform.

Sell-side analysts suffer from the same challenge: their jobs are dependent on access to company executives, so they can’t afford to offend them.

In contrast, investors get paid only when they get stocks right, so they’re less susceptible to pressure from company executives and therefore a better source of business analysis. This is also why investors are incentivized not to succumb to herd thinking, and explains why Seeking Alpha’s investor-contributors uncovered the China Fraudcaps, when business journalists failed to do so.