Tag Archives: b5media

AOL, 2006 Called and Wants Its Content Commoditization Strategy Back…

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Photo by jdlasica on Flickr
It was a Monday like any other Monday. After a weekend of too much drinking, low-key football-centric Sunday celebrations (Go Packers!) and an early night to bed, I woke up this morning in the way I normally do on a Monday: Cursing ye gods of Mondays past, and hoping the day would not turn into the inevitable case of the Mondays that they all do.

Wearily, I reached for my laptop to find out what the Monday morning tech news buzz was and my eyes flew open in surprise: AOL had acquired the Huffington Post for $315M in a hybrid cash and stock transaction. This only a few months after TechCrunch had been acquired, also by AOL, for an undisclosed amount.

It was a deja vu kind of moment this morning as I saw the stereotypical business model of the mid-2000s flash before my eyes. In those days, everyone thought they could make money purely on advertising and content. Crank out the content, get more eyeballs, get more ad dollars, PROFIT!

The problem was (and still is!) is that the more content that is produced, the less valuable it becomes. It’s really very simple economics. More importantly, the advertising world has two buckets… maybe three if you put Adsense by itself in the lowest bracket. You have direct-buy, expensive, high-return type ads. These are most often purchased by big companies with big advertising budgets like Apple, Cisco, etc.

The second type of advertising (putting aside alphabet soup forms like CPA, CPM, CPC, etc) is generically called “remnant advertising”. Remnant ads make up the vast majority of internet advertising. It’s cheap to buy in bulk (and in a less targeted way), doesn’t usually pay a lot and, in general, is a good way to do commodity advertising.

This is what we did at b5media. I’ve not spoken much about my time at b5media because, frankly, it disgusts me where they’ve come. We actually had a good product going and things went awry. I won’t place blame. But what I will say is… we built that company on commodity advertising, commodity content, and had a tough time growing the company. I left with over 350 blogs in a dozen “channels”, each channel being a grouping of 20-30 blogs around a topic like sports or entertainment.

It was easier to try to do ad sales for a group of blogs on a topic, than it was to do targeted, lucrative advertising.

The problem with the b5media model, along with the Weblogs Inc model that sold (ironically also to AOL), the Gawker model, the Glam model, and now the AOL model, is that the content quality sucks. When I pick up a magazine or newspaper, I would not liken most media to The Atlantic or The New Yorker, both of which are highly intelligent publications that put out content that is exceptionally tuned and academic. The quality of the content is orders of magnitude higher than most newspapers or magazines (obviously including this blog).

Those publications are rare and can get private money from subscriptions, etc. The advertising route is the cheap route, and the route that business models go when they aren’t good enough to charge for access (a more reliable revenue source).

For the record, commodity business don’t normally pay their writers anything comparable to what their “colleagues” at uncommoditized media organizations get paid. That’s because, their work is not valuable unless it is in bulk.

Going back to the $25M Weblogs Inc acquisition in 2005, AOL has gone down this road of commodity content before. They even killed off a bunch of the WIN properties keeping only the ones that were truly valuable – like Engadget. They are taking a different approach and buying individual high-productivity sites now – which is better – but then their strategy is one that involves combining these sites, at least on a content integration level, into a mass-produced, commoditized content machine.

So is it really different?

HipHop, PHP, and the Evolution of Language

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A lively little discussion developed over the past few days on the DC-PHP developers mailing list. We have a very active developers group here in the DC area – much larger than most cities, in fact. Part of what makes our group great is the diversity of background and experience that is in the group.

This was front and center over the past few days when one of our members, Hans, offered his opinions on Facebook’s new HipHop for PHP product. We have already expressed our intent to help make WordPress compliant with HipHop, something that will be beneficial to major WordPress sites like TechCrunch, Mashable, VentureBeat, WordPress.com, the NFL Blogs, the NY Times blogs, the Cheezeburger network (LOLcats, FAILBlog, etc) that carry large amounts of traffic. I hope to be able to consult with some of these organizations on moving into a HipHop system once my head is wrapped around it and WordPress is compliant.

Photo by Josh Hunter

Photo by Josh Hunter

Hans is an extraordinary developer. I have never met him personally, but his depth of knowledge on issues of security and scalability is downright frightening. He offered his own opinion of HipHop on the mailing list and so I’m going to pick on him a bit:

This HipHop thing is interesting, perhaps in much the same way as HipHop music: it feels like a hack. — And I mean that respectfully in both cases; I like hip-hop music, and appreciate how it pays homage to R&B roots, remixing/reinterpreting them, etc; and I think that the idea of taking one language and building it out to something else is also something I should support. After all, I’ve embroiled myself in code generation tools (e.g. Propel) that are operating on the same philosophical groundwork. But I also believe that there’s a general rule like “if you need code generation, there’s something wrong [in your design or in the tools you've chosen or ...]” … so those tools also feel like hacks.

In all of life, there is an evolution that happens. One iteration of something becomes better with improvements over time. This has happened on a micro level inside PHP. Without PHP 3 there would be no PHP 4. Without PHP 4, there would be no PHP 5. Ben Ramsey talked about this evolution before Christmas.

Why is it a hack to improve upon the tools used with a language? Is it a hack to use Memcached with PHP? Is it a hack to run on nginx instead of Apache or to implement FastCGI? All of these are third party software or extensions outside of PHP. So how is HipHop any different?

That’s all fair, but I feel like the problem here is that somewhere a long, long time ago, Facebook *must* have realized that they were going to have scaling problems. Long before they started having a problem, someone *must* have thought “maybe a compile-at-runtime language isn’t the right solution here”. I guess to me this cross-compiler is just a public way to admit that PHP is not the right tool for the job, but they’re stuck with all these developers that only know PHP so it was somehow cheaper to engineer a way to change PHP to C++ than it was to retrain developers on C++ (or, probably more realistic, Java).

I responded in that conversation with an only slightly edited response. While I appreciate, and always have appreciated, his frank, honest, high level view of PHP, web security, web applications, etc., he strikes me as somewhat naive and puritanical.

What I can say is *I*, along with dozens of other technology people in and out of DC, in and out of PHP, never look at our initial ideas as scaling ideas. We look at them as ideas and experiments to see if they have legs. In fact, I’d go so far as to say it is counter-productive to think about scale before thinking of concievability (is that a word?).

There’s a reason why Rails (God help us) is popular. It’s a great prototyping tool. You stand up an app quickly and let it into the wild to see if it has legs. Does it go? What are the market influences? What are the
pros and cons? Do we have to adjust?

After a concept is proven, then a solid dev team with solid tech leadership brings in their expertise to see if the idea can be built into something sustainable. As a sidebar, please take a read of Brad Feld’s very awesome
post from a few years ago “The first 25,000 Users are Irrelevant“.

My point is, it’s silly and a waste of resources for startup people to start thinking about how big they might get maybe 5 years down the road. I think you’d find out that, in most cases, successful technology, web-based companies happened by some dumb luck. Twitter. Facebook. Name-the-popular-app. Dumb luck.

Hey, I’d even argue that when too much comp-sci brain energy goes into an app, you get things like Wolfram Alpha. Cool. But useless. And not nimble enough to actually do the scaling necessary to need all that comp-sci engineering prowess.

Balance, my friend. Balance.

Facebook (and others) start with PHP because PHP is fairly ubiquitous and easy as pie to drop into production. However, there is a point of no return where you are committed to PHP and that’s where HipHop comes in.

Personally, I wish we had HipHop when I was at b5media. We had a ton of scaling problems with PHP and we were running fully clustered Apache servers (25 deep, if I recall), sharded MySQL across 6ish database servers, and we had massive I/O bottlenecks. We ran eAccelerator and Memcached and had squid-based load balancing and damn if Grey’s Anatomy or the Oscar’s didn’t pin our entire network on more than one occasion. What could have happened with an alternate to opcode caching. What could have happened if I had resources to put on developing C++ binaries of our frequently used PHP libraries.

I’ll tell you. It would have rocked. We were already committed to PHP. We were already committed to WordPress. And when the company started, we were all volunteer resources. There was no assumption that our idea had legs or I think everyone on the team would have quit our jobs immediately and put everything into building that company. It took a year to get there.

This is, for better or for worse, the way companies get started in the real world.

Appearance on the Mediasphere: Blogging Network, Advertising Networks and the Economy

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I had an opportunity to appear on the Mediasphere show with Jim Turner. I shared my thoughts on the future of online advertising and advertising networks, a topic that came up again this past weekend with the announcement that Pajamas Media, a conservative political blog and advertising, was closing their ad network.

Take a listen.

Avoiding the Tunnel

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Sir Isaac Newton was a noted genius among geniuses. Most of his lifework is seen culminating in the Law of Gravity and the development of Calculus. This, however, was not his life quest. History tells us that Newton was more concerned with proving that lead could be turned into gold (it can’t) and that the Christian understanding of the Trinity was a falsehood. Stories of Newton describe a neurotic man that would often not get out of bed for hours and sometimes forget to eat as he tossed his thoughts around in his head. The story says that calculus was developed as a result of his frustration with mathematics and a will to “force” the universe to bend to his own thinking.

One wonders if his genius wasn’t a little by accident.

Most of the time Newton spent on his studies, however, was not devoted to “real” science, by any stretch. In fact, all of his experiments and related scientific and mathematical discoveries were a result of his goal regarding lead and the Trinity. In summary, Sir Isaac Newton suffered from tunnel vision.

Tunnel vision tends to plague most people in one way or another. Entrepreneurs focus all their energies on creating businesses that resist the statistical odds and succeed. They devote hours of their days (and nights) and often find relationships in the “real world” strained, and end up sacrificing other very important aspects of their lives.

Cause-oriented people tend to make the cause their life passion and goal. I see this a lot here in DC, a city consumed with the political process and pre-loaded with non-profits dedicated to ending human rights violations, feminism, technology policy, gay rights, or war. Inevitably, the conversation ends up surrounding the cause.

In fact, addictive personality runs the risk of causing tunnel vision in any area of life. Certainly, very few of us border on the level of meshuggeneh that Sir Isaac Newton displayed, yet we all run the risk of getting out of balance if we’re not careful.

Several years ago, while working at b5media, I found myself incredibly burnt out and on edge. I was working 16 hour days, not because I had to but because I wanted to (tho, at times I had to as well). I was surviving on 4 hours of sleep every night and if I was pulled away from my work to do something else, I became incredibly irritable. Eventually, I recognized my problem and limited myself, when possible, to a normal schedule of 9-5 or similar. I couldn’t always do this, and I often worked weekends anyway, but I recognized the need for some kind of balance in my life. Eventually, I would take up photography as a hobby and put more time into that.

Last night, I spent time with folks from Tribune Interactive and the Baltimore Sun. The night before, I watched the Super Bowl with folks from Gannett. The night before that, I chatted with a few political operatives over a beer.

At the end of the day, stepping outside of comfort zones and participating in things that are untypical keeps people well rounded. It makes them more worldly and understanding of people not like themselves. In a society clamoring for inclusion and diversity, being positioned to understand, even if not agree with, other people is an important trait to have.

Do you spend time outside of your circles or on hobbies and activities?

Be Nimble, Be Quick, Grow

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Last night I spent the evening rubbing shoulders with some of the best and brightest traditional (and some online) marketers in the Capital Wasteland Region at a holiday party (There are many of them this time of year, are there not?).

As I stood there talking with a frequent reader of this blog, who also happened to work at Potomac Tech Wire, we got to discussing lessons learned from various times in our careers. I remember distinctly one of these moments from my days at b5media, which challenged me to remember that even though you think you know your job, career, industry or environment… you really don’t.

It was a Thursday night, like any other Thursday night. My son was in bed and my wife and I were dlipping around channels. One of our favorite shows, The Unit had just gone off at 10pm when all of the sudden, my Blackberry started buzzing. Annoyed, I glanced at it and saw alerts pouring in that the b5media servers were going down.

In those early days, I was the only full time tech person with b5media but Sean was putting in some hours as well. Both our Blackberrys were going off. Off to work, we went, at 10:05 pm.

It took awhile to go through the normal routines of checkup, because things were not responding at all. Finally logging in, Sean managed to dig around at all the usual traffic suspects but didn’t find any of them getting any kind of significant traffic. Trolling around more, we found out actually that this site was doing tremendously well after an episode ended minutes before with a cliffhanger that made fans think the main character was dead. If I recall, we were serving approximately 10,000 requests every second.

How would we have known, as non-Grey’s Anatomy fans that this was coming? What warning did we have? Fortunately, when the 1am shift arrived and the west coast had their opportunity to freak and panic and start hitting the site, we were expecting the surge.

It goes to show that when doing business with an internet audience, you can make assumptions (or fail to make assumptions) but it’s the things you don’t know that will take you down if you don’t appropriately adjust and grow with each learning opportunity.

As I discussed the sale of eBooks and MP3s with a marketer last night, it was the concept of transparency being not only great but required to make meaningful sales online, I wonder if that knowledge she now knows will help her in her online business.

Be smart, be wise, and learn where you can. It can make the difference in your online business.

Sucks to be a Blog Network These Days

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Having come from the blog network space, I have a mostly unique understanding of the difficulties encountered when running a content business. There is always a war between traffic and community, profitability and loss, long term projections and short term realities. It’s not an easy business.

It’s even more challenging when you’re a blog network. Unlike more traditional style content companies like Newscorp (owners of MySpace, AskMen.com and FoxSports.com) or the New York Times, blog networks attempt to take a relatively new medium, a blog, and lump it together with other relatively new media – blogs. There’s no counter-balance of strengths and weakness. They are all blogs, possessing the same inherent strengths and weaknesses.

One of the core problems with the “traditional”, if there is such a thing in the space, blog networks – and really any online media – is that the business model almost always comes back to advertising models of revenue generation. Historically, the advertising market has come and gone in a predictably cyclical way.

As expected, the advertising model is taking somewhat of a hit during these difficult economic times and only in the past two days, two major media players in the blog network space have had to cut pay, create layoffs or otherwise cut costs due to an impending, or in some cases already present, decline in online ad revenue.

Gawker Media, the second largest blog network and home to industry favorites Gizmodo, Gawker, Valleywag and Lifehacker has announced a restructuring of staff – laying off 60% of Valleywag staff, as an example, and increasing the staff on their flagship properties. Consolidation is the name of the game in this case.

Likewise, b5media (with whom I worked for several years), had an internal memo leaked (and TechCrunch published) describing a complete revamp of their compensation system “to reduce costs”. Many bloggers are taking significant pay reductions as the company streamlines their burn rate.

This on the heels of AOL/Weblogs Inc layoffs and pay reductions a few months ago and the very public walk-out of Profy staff when pay was to be reduced shortly thereafter.

Let me be clear. If you’re in the content space, you are dealing in a non-tangible asset. Therefore, the economic rules of asset valuation do not apply. There is no “market price”. There is no assessment value. There is no depreciation. If anything, content can appreciate over time. Typical rules do not apply and in a market where investors, advertisers and publishers are trying to identify concrete ideas and assets that they can count on as a sure investment, non-tangible assets will always take a hit.

Publishers, particularly publisher networks, have to look around and identify means to continue to generate non-tangible assets cheaply (yet fairly), and I imagine some models might end up looking to non-tangible compensation (such as community benefits) to acquire new publishers and content.

Problem is, bloggers have this idea that they can be rich by blogging. Some are smarter and think they can simply “make a living” by blogging, without ever uttering the rich word. Truth is, unless you’re a few important people in the world, it’s not happening. It won’t happen. There are other meaningful ways to benefit from blogging, and most of them are non-monetary.