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

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.

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

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

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

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

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.

Feed Subscriptions Are So Important

When I left b5media, I had established a base of over 1300 feed subscribers on this blog. I was proud of that because, let’s face it, if you aren’t a news site breaking news all the time, people are not as inclined to subscribe to a feed.

The feed at that time was hosted via FeedBurner with whom the network had an enterprise account with. As a member blog of b5media, and one of the folks that tested and pushed FeedBurner on the network, my blog was one of the first hosted under their CNAME policy. The CNAME policy allowed us to brand feeds with b5media (http://feeds.b5media.com as opposed to http://feeds.feedburner.com).

Obviously, I had some branding concerns to deal with and I contacted FeedBurner for a solution that would allow me to take control of my feed and retain the subscriber base I had established over a period of time.

FB: Simple. We can transfer it under your Feedburner account if you’d like
Me: Yeah, let’s do that.
FB: Oh wait, your feed is under the Feedburner Ad Network and so because of financial logistics involved with b5media owning that feed URI, we cannot transfer it. But, you can burn a new feed, delete the old and use 30 day redirection to send people to the new feed.
Me: Okay, that makes sense.

And off I went. I burned the new feed, deleted the old with redirection, and looked at numbers over the next few days. My feed subscribers had dropped to almost a third of what they were (down to about 400 subscribers).

By the time I realized that I had been nipped in the bud by the CNAME issue, it was too late and all those subscribers were gone with no way to communicate to them about re-subscription.

Over the past 3 months, I have rebuilt to around 850 – still a large distance from where I was, but slowly getting there. If you haven’t re-subscribed yet, please do so now.

Takeaways

Feeds are our bread and butter in blogging. Knowing that there are people subscribed to a blog, provides direct value to bloggers. It helps us understand the dissemination of our content and the reach of our audience. We value page-views, obviously, but feed subscriptions may be the most tangible metric of actual reach available.

When you find a blogger that you enjoy, vote with your feet (or clicking finger) and add their blog to Google Reader or one of the other many feed readers (most of which are free). We really do appreciate it. It makes us feel that the work we’re putting in is actually making a difference.

Other feeds that we provide:

Landed On My Feet

Back a few months ago, I announced my departure from b5media. At that time, I really didn’t know what I would end up doing. At the time, I figured I’d land on my feet doing something similar (Director of Technologyish) or maybe dip my toes in PR. Lord knows I wanted to get out of technology. No doubt I’ll be back in technology at some point in my life, but I really needed a break from it and wanted to explore other career paths.

Well, two months went by and when I left b5media, I quickly picked up with Lijit where, instead of dipping my feet in PR or continuing on the technology track, I found myself learning the ropes of Business Development.

Never been here. Never done that.

In typical Aaron fashion, I thought I could storm in and prove all the critics wrong. Wrong. I figured I could identify a bunch of high profile sites and, bam, I’d prove my mettle.

Wrong.

Don’t get me wrong, I did a fine job. I managed a few quick wins and set about on bigger targets. Time went by and the wins got farther apart.

Okay, I began realizing this was a marathon, not a sprint. I had to adjust.

Adjustment ongoing, however I’ve shown enough promise at this very new role for me that last week I traveled out to Lijit World Headquarters in Boulder, Colorado – a place once described as 50 square miles surrounded by reality – and met the entire team. In addition to a pleasant few days in the mountains and thin air, I was pleased to walk away with a full-time gig. Business Development Manager.

Scary title. I even now own a Boulder phone number. Fascinating.

Interestingly, I’ve learned a few thing about Biz Dev as it relates to other, more familiar roles.

  1. The key to BizDev is more about relationships and less about sales.
  2. Pitching doesn’t work. Talking does.
  3. BizDev is a war fought with a pistol, not a machine gun. (via Micah)
  4. Strategic wins are sometimes bigger than Big wins.

I’m sure there are other things that I’ll continue to learn about BizDev as time goes on. Love to hear your thoughts on this kind of role. Tell me what I need to learn.

It’s Done

I’m sitting in Toronto’s Pearson International Airport for, what I hope, is the last time in awhile. It’s not that I don’t like Toronto. It’s actually a great city and I’ve had many good times here.

However, this marks the end of the last 2.5 years where I’ve worked to build the technology at b5media. That involved early days of figuring out how to make WordPress work right, to the ending days where we worked to implement the Lijit partnership, to today where I said goodbye to the team and finalized a week of heavy brain dumping of my successor, Joe Taiabjee.

While b5media technology is in good hands with Joe, I’m just really grateful for the personal friendships and relationships I’ve had the opportunity to build over the past 2.5 years. I would never have had the opportunity to build a mutually friendly relationship with Darren Rowse, in the “friends” sense of the word.

Lee Newton, Brian Layman and even Mark Jaquith, who I called a friend before b5media. Darcie Vany who is the most egotistical person at b5media – even moreso than me, if that’s possible. ;-) My new BFF, Rachel Segal. Ninja Chad Randall who tells long stories. Shai Coggins who I’ve only met once. Laura and Corey and Joey and Gabby and… the list goes on.

Today I end this phase of my life but it won’t be the end. In fact, my parting words dfor everyone, including old men on the street apparently, is… See you at Gnomedex! I truly hope I will.

Update on Me, b5media, Future Plans

I hesitate to write this because it’s somewhat personal, and this blog has become anything but a personal blog. However, I’m going to write it anyway because people understand that, though there’s multiple writers here, this blog is largely still associated with me. And frankly, I’ve been asked a million times what is next.

Back at the end of March, I announced my resignation from b5media. At that time, I did not know what would be next but I was going to take an approach of “Wait and see” and figure out what opportunities were out there. Crazy talk, I know, quitting your job without having something lined up – but it had to be done that way. Let’s face it, it’s not right for me as an executive to be out soliciting work behind the company’s back. I’m not leaving on bad terms, nor do I want to ruin relationships in a company I helped build. It was the right thing to do. Gutsy. Ballsy. But proper.

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Since then, the question has come up, “Well, what do you want to do?” That’s been a question I’ve actually wrestled with quite a bit. Identifying and targeting the space I want to be in. Something somewhere in the bizdev, social media, blogging relations world – yet, with my hands in the operational side of things as well, whether development or otherwise.

See, if my experience at b5media has taught me anything, it taught me something about the growth of a startup and the phases those startups go through. I’ve learned something about scaling a business. Not everything. I’m leaving the network in the hands of someone else who can bring that experience in. Anyone who knows WordPress knows that out of the box it doesn’t scale well. How do you do hundreds of millions of requests and keep ticking? How do you run WordPress on 350 blogs and keep it all ticking?

Yeah, I couldn’t have done it by myself – and I haven’t. That’s where “learning how” comes into play.

However, my rolodex is thick. I love meeting people and it seems like everyday, the rolodex gets thicker. I can help people get access to influencers, networks, businesses. Not everyone, but then no one can do that. Unless you’re Scoble (Hey, nice new design, Robert!).

The economy is in a weird place right now. No one knows if we’re in a recession or not. If we are, it seems the web/tech space is largely unaffected. Investments are still happening. IPOs (the death of the dot-com era) are few and far between. The space keeps plugging along even if we have to tighten our belts a little bit. So, though the phone has been relatively silent, I have gotten a few “Hey, Aaron, we want you to come work with us” calls so far. I think it’s fascinating when someone else calls me, but thats neither here nor there.

Martini Glass

All this to say, b5media has hired my replacement. We’ll talk about him more in the coming week. However, my last day is Friday, May 16. Effective Monday, May 19th I am an independent contractor, consultant, “Web Strategist”, WordPress freelancer, Communications strategist, advisor.

This is scary actually. Not really what I had planned. Not really what I want. But it seems to be the direction life is going. Plus it seems like the only way that I can retain a healthy degree of independence, not have to go into an office every day, and be involved in lots of various things going on around the web. Currently, I have a verbal agreement with a Web 2.0 company, a pseudo-Web 2.0 company, and a PR firm for work with more in the pipeline.

If you’d like to be in contact with me to help you out, drop me an email at aaron@technosailor.com. Let’s talk.