Deep Jive Interests

Andrew Goodman talks to Christine Herron, Ted Murphy, Mike Masnick and Nancy Peterson on monetizing things beyond Adsense.

• On business models
  • MM: There’s a lot of stuff that’s free — what do you charge for and what do you give away … the more you look at the economics of things and the history behind things, you realize that every product is made of different components.  There are things that are infinte and some that are scarce.  And some have components of both.  Pens are scarce, but its a pen that’s from Staple that has is not scarce.  The inifite things can promote what’s scarce, and what’s scarce can be sold and monetized.  New scarcities are things like time and reputation.
•  Is there too much fear?  Aren’t there lots of creative ways to monetize?
  • MM: music is an obvious example — the recording industry is freaked out about the Internet.  But that’s because they incorrectly think they’re in the music industry — but they’re actually part of the music experience.  The song is the infinite component but everything else is scarce.  Concerts, seats, access to the concert, physical CD’s are still scarce, and can be sold if you can make it valuable — even if you give the music away.
• Web entrepreneurs are skilled at aggregating and creating content, such as portal and professional services.  What are the broader range of monetization tactics?
  • MM: The joke for web2.0 is Ajax, adsense and arrogance, right?  Advertising models work for some things and it works when you have community and attention — but its not something that lasts forever and it isn’t cyclical.
  • TM: When you look at impressions on a website, a lot of people don’t care where they come from. Value isn’t put on the content of the site that they came from.  What our model is to provide a way for the content creator to monetize the content they are creating.  There’s value in the content beyond the impression and the click.
  • CH: Costco gives away those creampuffs in store, but they wouldn’t give away any if some weren’t going to buy the big bucket of them.  You need to work out how many are going to be freeloaders and how many are going to buy the big bucket and cater to them.
• Display ads and Adsense, and in your case its different.  What are PayPerPost’s policies?
  • TM: the advertiser can set for the kind of commentary, positive, neutral or negative.  Most choose neutral.  But there’s some advertisers that say that people can say what they like *anyway* — why would I pay them to talk bad about it?  If advertisers specify something as positive only, its taken up  much slower than neutral offers.  It turns people off.  But my background is advertising.  Clients say we something that is integrated — something beyond banners.  And that’s really what PayPerPost is — integrating things into content rather than a simple ad unit that anyone can buy.
• Is PayPerPost a more obvious version of what we see already — Google’s Pay Per Action and so on.
  • NM: We launched homestars last year and long tail is the reason why we get traffic every day. Over 65% are one off terms for all kinds of home related terms. The learning curve for me is around building communities and in different geographic locales
• How do we get the market into that — into long tail content
  • NM: Its all about value to your users, and demonstrating that people who use have high intent.  Ikea, for example, is still looking for online venues, and they’re looking to homestars and have a high intent, with things like their cabinets.
• How does money change hands with popular niche sites built around popular topics?  Isn’t the big media stuff easier?  What are some of the things that are done wrong?
  • CH: Its in some ways easier to start and grow in scale when you’re going for the “head” — the competition is very different than going for the tail, its harder, in fact.
  • MM: The niche content players are aiming to get to the head in some manner.  What digitization does is open up the long tail where none existed.  Amazon and Netflix are examples where 20 years ago things like that never existed.  There was no long tail at Barnes and Noble or Blockbuster.
  • CH: Amazon and Netflix started by selling niche content.
• How confident would you be in terms of running quality content versus low quality content who are grabbing a few dollars by dominating the searches
  • MM:  If more and more content is good and credible it pushes you to create more content.
• Do freemium models actually work?
  • CH: You’d get a different answer re: content and services.  Services?  Its a hard thing to go at.  In content, its simply different content.  Porn, for example, cannot sell ads.  You must sell the content.  No one is going to buy ads for Porn.  Three is an overwhelming desire to pay a subscription for unlimited access — whether its the Wall Street Journal, or Porn.
• How we make adsense work better?
  • TM: It does work for some people.  But at the same time, if you look at how much traffic you need to make money, for most people it just doesn’t work out.  In the long tail, its hard to make money.
  • CH: Its easy to make a little money.  I think when you get a more meaningful income stream and when you get to charge a much higher rate.  If you sell specialized bathroom equipment for the elderly for example, even.
• Has the internet made niche content more local?
  • NP: No question — homestars, its all people connecting and talking about home renovations.  It all starts to spiral when companies start getting involved.  Being local is important for home renovations — and the same thing could be said for issues around health-geared content
  • MM: What this is all about is community — whether its people who have the same disease or experience — its all about building different communities.  Local communities are one way to define similar interests.
  • CH: With geography, some companies have raised a lot of money.
• What about video content and advertising?
  • MM: There are lots of different ways of looking at it.  How much advertising is generated around YouTube, what about pre roll or post roll — what doesn’t get counted is the fact that an awful lot of videos are actually advertising themselves.  If not a person, a brand, or someone’s ability as a movie maker or whatever.  It begins on how you define advertising — when you change your definitions, then you need to change your models  If you’re interested in getting something else then access, building community, and getting people to talk about your video is important — more so than pre roll ads.
  • TM: Our system allows people to make videos for the advertisers.  I can see a future where I have $100k to have a single video made, or get 1000 videos made by users and hooked up to YouTube.  Whether its product placement or commercials, I think there’s a big future.
• Isn’t the real long tail story about artists who couldn’t get a deal, but are now able to make a living?
  • MM:  If you’re trying to start a business — well, no one starts a business to make just enough to write a book, for example.  I think its a different discussion, but I don’t know how much interest there is in that (here)
  • CH: Specialized and niche businesses are different than things that turn into huge platforms and you have stuff in the middle which aggregates that smaller stuff.  You need to figure out who your closest competition and partner with them.  If you look at content, its a 50% partnership in many cases, but niche content providers have access to these things that larger providers cannot.