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

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?

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The Power of Bloggers

I subscribe to a handful of blogs that are completely unrelated to my niche. The reason behind these subscriptions are varied: historical niche coverage that I’ve done (for instance, politics when I got started), friends or associates, really killer blogs related to specific sports teams, etc. There’s different reason. Largely, though, my RSS reader is a smattering of technology news, analysis, business, etc combined with a growing number of search feeds from Technorati, Google Blog Search or Icerocket.

One of the blogs I do subscribe to is Outside the Beltway which is one of the few political blogs that stuck after I stopped covering politics. Occasionally, James covers a topic that has crossover into the Technosailor market. This was one of those posts.

I still think the political space is different than the rest of the blogosphere and is a bit myopic (okay, a lot!), but there’s some great stuff. In his article, James notes that back when he began blogging in 2003(?), bloggers liked to write about blogging.

Unfortunately, it’s still that way today. Am I doing it now?

Largely, he makes a good point inadvertently, that the great blogs today are blogs that have something to say. They might be seen as “media”, depending on the niche. They might be seen as Journalists, depending on the niche. In the tech space, I’d call Gigaom a journalistic property, more than a blog. TechCrunch is largely a media organization, but I do question the journalistic legitimacy of a “publish now, correct later” site (something that Mike acknowledged in a Mesh Conference keynote last year and numerous other times as well).

I don’t want to get broiled down in the question of what is journalism and what is not? I don’t really want to discuss the “media merit” of any site, really.

More importantly, there is an evolution that takes place where a blog goes from a blog to a media property. It’s hard to tell, at least for me, what that point is. Is it when a site gets more than one author? Is it when there is a certain “rate of fire” on posts per day? Per week?

Is it pageviews and eyeballs? Is it simply a nomenclature thing where the Editor stops considering and calling the site a blog and starts referring to it as something else? Is it advertising? Is it the presence and participation in a network?

What’s the difference? Where is the line?

I think it’s obvious that some sites are “media” while others are not, but where and how does this evolution take place?

I expect other people to have different theories than I do, and that’s okay. My feeling is that it’s a combination of all of those things, but mostly it’s how the site is “sold” to readers? I see Technosailor.com, for instance, as a media property. Yes, it’s a blog? But is it?

We’ve recently refreshed the layout of the site to be more of a newspaper look, thanks to a large degree of influence from Huffington Post and The New York Times – both significant, and undeniable, “media outlets”.

Is that enough though? Probably not.

I’ve also hired other writers and contributors with an eye on hiring more as I’m able to recoup costs via advertising and other sponsorship. This is another ingredient, or at least that’s what Google News believes, since it does not accept any sources that don’t have multiple authors.

What’s the difference? Where is the evolutionary point?

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Welcome Huffington Post Readers

I’d like to extend a warm greeting to readers of the Huffington Post where a piece I wrote earlier today, entitled Two Castles of Power, was published.

I don’t talk about politics much around here. I used to. Back in the day. However, the audience here is generally keen on reading thoughts about technology and business – particular social technologies and how this stuff really affects our lives.

My name is Aaron Brazell, and I’m the Editor here at Technosailor.com, however, others also contribute and we’re working on putting together a nice team of folks.

Generally, Technosailor.com is not about the news. Instead, we like to come in after the fact and offer analysis of the news. We like to leave the news breaking to TechCrunch and other large technology news blogs.

There are several really great series that have been written here and I’d like to point them out.

In addition, you are probably politically minded. You might want to see why I think the President should be impeached.

Otherwise, enjoy your stay. If you like what you see, go ahead and subscribe and keep up with us.

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