Why the Facebook threat to most media businesses will only get worse

Edited excerpt from Facebook hosting doesn’t change things, the world already changed by Eugene Wei:

When Facebook announced its offer to host content from media sites like The New York Times, the media went into a frenzy of apocalyptic prediction. But whether media sites allow Facebook to host their content or not won’t meaningfully change things. Let’s just list all the conditions that exist and won’t change one bit whether or not you let Facebook host your content:

1. News is getting commodified.
2. Distribution is effectively free.
3. Marketing is cheaper, using social media.
4. Competition for attention is at an all-time high and getting worse.
5. Facebook will continue to gain audience.
6. Facebook and Twitter and other social media drive a huge % of the discovery of content.
7. Media ad experiences are awful.
8. Media business models are not great.
9. Tech companies have better ad platforms than media companies.
10. Tech companies have a tech hiring advantage on non-tech companies.
11. Design skill is not equally distributed.
12. Tech companies are rich.

I can offer some positives. A media company may not be able to be world class at every layer of the full stack, from distribution and marketing to ad sales and producing great content, but it doesn’t have to be. Far better to be really good at one part of that, the one that tech companies are least likely to be good at, and that’s producing great, differentiated content. The fact is, great content is not yet commodified.

(1) The litmus test for the survival of a media business is: “If someone is interested in [the area we cover], why do they have to read our content?” If you can’t answer that question, you’ll lose to Facebook, because it has become the daily content aggregator for most people.
(2) There are two acceptable answers to this question for a media company: (i) “We publish content that the reader cannot miss”, or (ii) “We tell you everything you need to know about this topic (even if you can find it elsewhere), but without the noise.”
(3) Very few media companies publish “can’t miss” content because most of them are in the entertainment business, and entertainment is optional. They are not in the help-you-make-decisions business, where great content is mandatory.
(4) The good news for us: Seeking Alpha is a must-read site for investors. If you invest in small cap stocks, for example, you have to subscribe to Seeking Alpha PRO because much of the coverage of small caps has moved to Seeking Alpha. The bad news for us: “Media ad experiences are awful. Tech companies have better ad platforms than media companies.”
(5) Cf. Charging for content will only be successful if this condition is fulfilled.

Does this make someone a troll?

Edited excerpt from points I made in a discussion about the Iran debate:

One of the things we learned from building Seeking Alpha’s successful comment community was which behaviors hindered productive debate and caused animosity. One of the most common is: Ascribing negative motives to someone you disagree with.

When you ascribe negative motives to your opponent, what you mean is: “You’re only saying this because you’re biased, not because you really believe it. So if I can reveal your motives to everyone engaged in this debate, I don’t need to address any of the substantive points you made.”

That, of course, is wrong: even if someone is biased, their reasoning might be right. Ascribing motives is therefore a cowardly way to avoid having to address the points your opponent made.

The ascription of motives to an opponent is also, in most cases, highly questionable, because it’s usually impossible to verify someone’s motives unless they state them explicitly. Once people start ascribing motives to their opponents, the debate becomes an unwinnable mud-slinging match, where each side throws allegations about motives at the other side which can’t be proved or disproved. That’s a sure recipe for acrimony and polarization. Even more troll-like is to ascribe motives to someone which contradict what they themselves have explicitly stated are their motives.

Ascribing motives to people in a debate is therefore a polarizing distraction from the real issues. So if you care about an issue, and you’re discussing it with other people, you should avoid ascribing motives to people you disagree with, or responding to comments by other people who ascribe motives to those they disagree with.

(1) Question for moderators of comment communities: Is ascribing motives to other people sufficiently troll-like to warrant blocking those who do it consistently?
(2) Cf. Should websites shut down comments?

Charging for content will only be successful if this condition is fulfilled

From Cracking the Paywall by Frédéric Filloux, January 2012:

The Times builds its paid-for strategy on three key factors. Of these three factors, the uniqueness of content remains the most potent one. The New York Times has no equivalent in the world when it comes to great journalism, period. More than any other newspaper in the world, the NYT has a huge base of loyal users.

With the inflation of aggregators and of social reading habits, the natural replication of information has turned into an overwhelming flood. Then, the production of specific content — and its protection — becomes a key element in building value.

From Pando erects paywall of irrelevance by Adam Tinworth, June 2015:

Pando have decided to erect a paywall. I guess we’ll find out how many people are willing to pay for undifferentiated opinion in a heavily over-provided news space (startup-centric tech), huh? Having spent over a decade working with paywalled business, both successful and unsuccessful, it’s pretty clear that people will pay for news they can use – and not undifferentiated news and opinion. My experience of reading Pando is that they have the latter not the former.

(1) Both Frédéric Filloux and Adam Tinworth agree on the same requirement for charging for content, but use different phrases: Frédéric talks about “uniqueness of content”, and Adam “differentiated news and opinion”.
(2) I suspect that many content entrepreneurs overestimate the degree to which their content is unique. What many content entrepreneurs see as differentiation in subject matter and style is often indistinguishable to readers. Perhaps this is the core of Adam Tinworth’s criticism of Pando.
(3) Note Adam’s addition that “people will pay for news they can use”. See: The content business: Entertainment, or helping users make decisions?
(4) What are the implications for Seeking Alpha’s subscription businesses, PRO and Marketplace? (a) Seeking Alpha’s content is unique and differentiated (for example, Seeking Alpha is now the only venue for meaningful analysis of many small cap stocks), and (b) high quality analysis of stocks is intrinsically valuable.
(5) Our challenge is to ensure our paid content is unique and differentiated versus what we give away for free. Yesterday I met a hedge fund manager who said “I use Seeking Alpha regularly, and it’s free. Thank you!”

Who has more power in the media business, celebrities or platforms?

Edited excerpt from ReCode to Vox by Bob Lefsetz:

Just because you’re a star don’t think you’re bigger than the enterprise. When the world is wild and woolly, new and exciting, pioneers fight it out for eventual dominance. But once the landscape starts to coalesce — pick another venue!

ReCode had the best tech news in the business. Walt Mossberg and Kara Swisher built a team of experts. But nobody cared, nobody went to the site, they thought their minions would follow them but it turned out they were aligned more with the Wall Street Journal, their former home, than with the writers themselves. It’s kind of like when the lead singer leaves the band… good luck! Sure, there are exceptions, but… But now you can’t even find the new sites, you can’t get the word out. Furthermore, the Journal hired Joanna Stern, a cheeky tech writer who is not as good as Mossberg but oozes personality, and Geoffrey Fowler, who’s technically sound, albeit dry. Turns out we don’t need THE expert as much as AN expert. (And the Times got Farhad Manjoo, who in his own way is just as good as Pogue.)

So if you’re starting something new — by all means go for it, it’s the essence of Silicon Valley. But if you’re an individual star, chafing under the reins of your boss, believing you can go it alone… You probably cannot. Especially if the world you live in is solidified.

(1) Platforms have power because (i) it’s hard to build traffic from scratch, and (ii) they benefit from network effects.
(2) The power of a platform rises with the number of content creators on the platform. This is why crowdsourced platforms like Seeking Alpha are usually more powerful than platforms with salaried content creators.

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.

Are advertisers responsible for pageview chasing by media websites?

Matthew Ingram writes:

Everyone seems to want to generate content that will go “viral” nowadays — to the point where a new site specializing in that kind of content, such as Upworthy or ViralNova, seems to come along every week… In the end, the impulse to find or build portals around viral content is driven by the same motivation as SEO was — namely, to produce vast numbers of pageviews that can be sold to advertisers…

In part, the blame for this state of affairs lies at the feet of the advertising industry, which continues to focus on big pageviews numbers even as it claims to be more interested in engagement and other metrics.

Matthew is right that content publishers’ behavior is determined by what pays the bills. But he’s wrong that advertisers don’t pay up for engagement. We’ve seen, for example, that advertisers value and pay handsomely for placement on vertically specialized sites like Seeking Alpha which help users make decisions.

Rather, 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. But that audience gets diluted with growth, and in any case can be targeted or re-targeted elsewhere.

The digital media crisis — a personal perspective

From Media Consumption in 2014 by Shane Parrish:

As we approach 2014, I’ve been giving my media consumption some thinking… We tend to just add things and never take things away. There are always more people to follow on Twitter. More people to ‘friend’ on Facebook. More periodicals to read. More blogs to subscribe to. More news to watch…

But what are we so worried about? Are we really going to miss a major news event? No… So is it that we’re worried about not finding out in real-time? Who cares if you find out in the first minute that Nelson Mandela has died. What matters is that he’s gone…

It’s not just news. It’s the rebirth of Yellow Journalism, where everyone wants to stir emotion more than inform. Everyone wants your eyes and, more importantly, your clicks. Traffic matters. And every day the competition for our attention starts all over again. It’s toxic to us.

But is any of that making us smarter, furthering our relationships, or giving us real pleasure? I don’t think so.

Why is this happening? If readers were paying for something, delivering value to them would matter. But most digital media sites generate revenue exclusively from advertisers, and the cheapest way to generate ad inventory (= page views) is by seducing readers with alluring headlines, listicles and slide shows. They entice you to click, but in the long run the lack of real value leaves you feeling taken advantage of, that you’ve wasted your time.

Metrics determine outcomes. If a digital media business sets page views as its success metric (and most do), it will inevitably end up peddling sensationalism and yellow journalism, to the long run detriment of its readers.

What happens when a content site stops optimizing for page views?

Hunter Walk, discussing The Information, which charges $400 for an annual subscription:

For me the value in The Information is not solely in what they’re providing but what they’re leaving out. The ~two articles a day are both interesting. Because they’re not playing a page views game, they don’t need to overload me with 25+ posts every 24 hrs. The site is spartan because they don’t need to worry about IAB units. A small number of writers building their beats give me the chance to see each journalist’s style distinctly, not settle into some random byline slot machine of varying quality.

Some folks are raising an eyebrow on the pricetag. “What are you getting that’s worth it?” Strangely my reply is as much about the 80% I’m not getting as the 20% they’re delivering.

Or to put this another way: in a world awash with pageview-driven content and no robust way to filter for quality, a service with a high signal-to-noise ratio is valuable.

Is the next wave of social networking the return to privacy?

From Instagram’s New Feature Shows How the Internet Is Embracing Intimacy by Noreen Malone:

…there already exists technology that allows you to share “a moment” with your friends. You can text a picture, or email it, or even pass your camera’s stored photos over to your friend the next time you hang out together. But that’s precisely what makes Instagram Direct interesting. The service is gambling (probably correctly) that people crave the chance to carve out private space online. It’s a shift away from the public-broadcasting instinct that drove the creation of so many social networks just a few years ago.  For years, the social Internet seemed determined to strip away the possibility of privacy. Now, it seems to be reversing course. Instagram Direct is just the latest such indication.

So why would people want to use a separate app for something like this? …Maybe a backlash against all that oversharing and saturation and exposure…

A better alternative to TechMeme?

From the NYT:

One of the first Web sites loaded on Silicon Valley’s laptops and iPhones each morning — and then again and again throughout the day — is Techmeme… Techmeme groups stories according to importance, and clusters other reporters’ and bloggers’ perspectives on the same topic… the site has become more relevant and popular with its 260,000 readers, who check it three million times a month…

Still, Techmeme does not catch everything and sometimes it catches too much of the same thing. So Bijan Sabet, a venture capitalist at Spark Capital who reads Techmeme daily, also visits other aggregators, like Hacker News, because they have more diversity. “Techmeme is often dominated by Apple, Google, Facebook or Twitter news,” he said. “That’s great, but insufficient.”

I’m one of those 260,000 TechMeme readers — I love it. It does a great job of surfacing the issues most widely discussed  by bloggers and mainstream media.

Meanwhile, Seeking Alpha isn’t viewed as a tech site, but about 860,000 people read Seeking Alpha’s tech news coverage. It’s fast, remarkably broad, and provides a bullet-point summary of each story.

Does that mean Seeking Alpha is a better service for tech news than TechMeme? Not necessarily — they’re different animals. Seeking Alpha’s tech coverage is broader and surfaces what’s important to investors, whereas TechMeme surfaces the top stories determined by what the tech bloggers are excited about. If you’re serious about tech, you probably want both.

Links: TechMeme, Seeking Alpha’s tech news coverage on the web, via email alerts, and via the Tech Investor mobile app.

What content will people pay meaningful amounts for?

Tech journalist Jessica Lessin left the WSJ to start The Information, a subscription-only site which charges $399 per year. From Mathew Ingram’s interview with her:

People talk about this type of paywall is good or bad, but it really depends on the content. If you look at what Paul Carr (of NSFW Corp.) is doing, it’s great, but I think he would agree that no one is going to spend $400 a year on it — the only type of content you’re going to pay that much money for is content that helps you in your business. All the different paywall experiences are very different because the content is different and the market they are going after is different.

We know the audience we want to go after — they’re professionals inside and outside of tech, an audience that pays for information that’s going to make them smarter and give them an edge and to be ahead of the curve, and many of them already expense information like that. And we knew that we wanted that kind of audience from the get-go.

We’ve experienced the same thing in Seeking Alpha. People won’t pay meaningful amounts for content to entertain them. But they will pay meaningful amounts for something that helps them get their job done better and faster, such as our equity research platform for fund managers and analysts.

The problem with content paywalls, and the solution in one vertical

From Matter, the long-form journalist startup acquired by Medium:

It’s not only readers who are intolerant of paywalls: other media organizations are, too. When you’re subscription-only, you have to do a lot of legwork to make your stories marketable: the sort of thing that could be picked up by other outlets. We think our stories are, generally, pretty newsworthy… But it turns out that other outlets—from major news outlets to solo expert bloggers, and everywhere in between—are pretty reticent to write about, syndicate, or even link to, paywalled material. We’ve had some good support from partners like The Guardian and The Atlantic, but those relationships are hard to build.

This was a problem that we also grappled with inside Seeking Alpha. How could we create a valuable subscription product without reducing the ubiquitous mindshare we have among investors, and the distribution and exposure which we provide to our contributors?

The solution we came up with was unique to the finance vertical: We’d give our paying subscribers an early look at the best investment ideas in Seeking Alpha, and exclusive access to single-stock articles 30 days after publication. Neither the “early look” nor the archive paywall meaningfully reduce our mindshare or the exposure we provide to our contributors.

It turns out that the archive is extremely valuable to analysts and portfolio managers who are researching stocks — it’s become a must-have equity research platform. And the growth of our subscription business will allow us to pay our contributors more.

A fascinating innovation for content companies

From Matthew Ingram’s article about the purchase of Paul Carr‘s NFSWCorp by PandoDaily:

Although it started with a hard paywall, Carr said one of the innovations he is most proud of was the idea of “subscriber unlocks” — which allowed each subscriber to the site (those who paid either $3 a month for digital-only access or $7 a month for access to digital as well as the monthly print magazine) to share up to 10 articles from NSFW Corp. per month with anyone they wanted to, via a custom URL that bypassed the paywall.

“It’s one of the few things that I’m sad about because it really worked, but it doesn’t really fit with Pando — the idea of saying to subscribers that it’s up to you how open our paywall is, that’s one of the things I’m most proud of… we had to solve that problem of how you show people what’s behind the paywall without just giving away a bunch of free stuff, and the answer is you do what a member’s club does, you allow subscribers to share with non-members.”

I wonder how well it worked.

Why pageview-driven websites succumb to herd-thinking

Stratfor’s David Judson explains why most journalism suffers from herd-thinking:

The fundamental truth of news reporting is that it is constructed atop pre-existing narratives comprising a subject the reader already knows or expects, a description using familiar symbolism often of a moral nature, and a narrative that builds through implicit metaphor from the stories already embedded in our culture and collective consciousness. No writer can, and no writer should, resist these communicative tools.

He then argues that meta-tagging of articles and search engine optimization accelerate the homogenization of reporting into common cultural narratives:

With journalists already predisposed by centuries of convention to converge on stories knitted from a common canon, the marriage of meta-narrative and meta-data simply accelerates to the speed of light the calibration of topic and theme.

This suggests that content providers which measure their success by popularity (the pageviews metric) will inevitably be drawn to reinforcing existing narratives, rather than questioning them. In contrast, Mr. Judson says, “our fundamental value proposition, the reason Stratfor exists, is that we do not always play the media’s game.”

The same is true of investors. They are forced to recognize and avoid herd-thinking, because they live by the metric of investment returns, not pageviews. Investors are constantly scored by the market, unlike journalists who are rarely scored on their predictive accuracy. And investors can only generate abnormal returns with a non-consensus view of a stock, since stock prices embody consensus expectations. This leads to rigorous analysis and a drive to question existing narratives.

I often wonder what would have happened if Seeking Alpha had existed before WorldCom and Enron melted down. The investors who publish on Seeking Alpha would probably have uncovered those frauds, just as they (and not the business journalists) uncovered this.

Perhaps this explains why fundamental analysis of stocks by investors provides more original insight, both investment insight and business insight, than traditional journalism. It’s why Seeking Alpha is widely read by business leaders, not just investors.

Chartbeat’s suggestion for how to measure content quality

From Chartbeat CEO Tony Haile:

Pageviews do not measure the quality of a piece of content or its ability to hold and engage an audience; it’s a measure of the provocativeness of link copy. That’s it. It’s highly gameable, and by separating the metric of success (clicking on the link) from any relation to the content itself, that means the cheapest, most provocative link creator will always have the advantage.

Here’s the thing though. When you actually sit down with publishers, across the board there is an enormous degree of consistency around what their goals are and what really matters to them — and it’s not pageviews. What matters is building an audience who knows who you are, likes what you do and most importantly comes back to you again and again…

When you eschew chasing pageviews and make building a loyal audience your goal, it not only aligns commercial and editorial goals, but also dramatically increases the pace of cultural change within newsrooms. It turns out that what loyal audiences care about is what good editorial teams care about too: great articles that capture time and attention.

Tony is right that pageviews is a poor measure of article quality. Sites that optimize for pageviews inevitably publish provocative headlines and populist content. But time on page (which Chartbeat provides) isn’t a solution, because shorter articles aren’t necessarily lower quality or less valuable. This is particularly true in finance, where investors want information which has maximum signal-to-noise ratio, is fast to read, and is delivered instantaneously. Like this.

So what’s the right way to measure content quality for us?

Startup strategy: Why you have to demand commitment

When you give something away, such as free content on the Web, you don’t know how much your users value what you’ve given them. Not knowing how much your product is worth to your users is a problem, because great businesses constantly strive to increase the value they provide.

Can you solve this problem by tracking usage data? If people use my free product, doesn’t that prove they value it? Well, repeat usage that requires clear intent to achieve a predictable result, such as Google searches, may prove your users value your product. But impulsive usage, such as clicking on a sensationalist headline, doesn’t tell you much.

While willingness to pay is the most obvious indicator that someone values your product, there are others. For example, you can demand effort, such as forcing your users to register. This runs counter to many internet companies’ strategy of minimizing “friction”, to enable instantaneous, impulsive usage.

In Seeking Alpha, we wanted to keep our content free, but wanted to ensure our users valued it. So we forced our users to register. Our thinking was “We’re not interested in a relationship where you don’t value our product enough to register for free”.  By getting our users to register, we could also do much more for them, such as send them articles on their portfolio and provide them with compelling personalization.

So far, over 2.5 million people have registered on Seeking Alpha, over 2 million have portfolios, and over 1.7 million receive email newsletters or real time alerts, and over 100,000 people use our apps each day.

The corrosive impact of pageviews as the target metric for content websites

From Evan Williams, founder of Blogger, Twitter and Medium:

News in general doesn’t matter most of the time, and most people would be far better off if they spent their time consuming less news and more ideas that have more lasting import. Even if it’s fiction, it’s probably better most of the time… the state of tech blogs is atrocious — its utter crap. Part of the reason a lot of tech blogs are bad is the people writing them don’t really understand what they’re writing about.

The system’s working if there’s great stuff that otherwise wouldn’t see the light of day and/or gets more attention than it would otherwise.

(1) The root of the problem is that almost every free, ad supported website optimizes for pageviews. While quality positively impacts pageviews, there are cheaper levers that are far more powerful.This leads to volumes of low quality content, with no attempt to create or surface the “great stuff”.
(2) Hamish Mackenzie calls this “the pageview-chasing linkbaitery of the Web 2.0 era”.
(3) The corrosive impact of pageviews is creating a backlash, with the creation of quality-centric sites like Medium, Aeon Magazine, Next Draft, and Breaking Tech News.

James Altucher on the problem with free

From James Altucher:

People don’t value what they get for free. I’ve seen this in every business I’ve ever run. I’ve seen this in every service I ever provided… How do they kill you? They always expect good work for free. They set the bar higher and higher. And they feel comfortable dictating what free things they should get from you…

It’s not because it’s about money. It’s because I’ve seen it directly: people treat you worse when you give something for free. And they treat you better when they feel like they have given something for the value they received.

James is remarkably entertaining and thought-provoking. The whole article is worth reading.

Measurement is the key to success for content businesses; but measurement of what?

From Michael Schrange, writing for HBR:

Newspapers are indeed in information and digital content businesses. But their decision-making is typically far less data-driven than the big box retailers whose advertising they’re so desperate to get. As a rule, newspapers know less about their readers and advertisers than an Amazon, Google or Facebook does. These institutions built their brands not by focusing on customer experience or using strategic analytics but by successfully defining the most important and newsworthy stories in their communities and beyond. Those days are officially gone. So are the business models that made them profitable. The competition has both bigger and better data while offering much better customer experiences. There’s little these papers do that deserves to command a marketplace premium from customers.

Traditional newspapers, he argues, built their organizations to optimize for content quality. But content quality now matters less to content businesses than data (knowing your readers) and “customer experience”.

Is Michael right? It depends on your business model. If your main revenue stream is ads, you’ll optimize for page views, namely ad inventory. You’ll find that many levers are more important than content quality, such as titles, populist subjects appropriate for social sharing, and page-maximizing formats such as slide shows. But if your main revenue stream is paid subscriptions, then quality — the key determinant of willingness to pay — comes first.

This isn’t to dismiss the importance of data and user experience for quality-centric content businesses. If you’re a quality-oriented content business, you still need to ensure that you are data driven, and that overall user experience, which is primarily determined by content quality, has measurable metrics.

Short form content rules in mobile

Nir Eyal explains why the app “Bible” now has over 100 million installations. One of the key elements:

The app chunks and sequences the text by separating it into bite-size pieces. By parsing readings into communion wafer-sized portions, the app focuses the reader’s brain on the small task at hand, while avoiding the intimidation of reading the entire book… Furthermore, daily reading plans are kept to a simple inspirational thought and a few short verses for newcomers. The idea is to get neophytes into the ritual for a few minutes each day until the routine becomes a facet of their everyday lives.

Short form content rules in mobile. (For that reason, we made short form news the core of Seeking Alpha’s mobile apps, like our Tech Investor app.)