Where Are The Nuts And Bolts of The New Media Economy?

One of the things that is common amongst a few past clients, and hopefully a few future clients, is how social media/citizen media balances with journalism balances with profitability. Old media business models are about as stable as dictatorships in the Middle East at the time of this writing, and it's difficult to discern the nuts and bolts of a new media that has the benefits of traditional media while bringing with it new benefits of the newer forms of media - namely social media and citizen media. To an extent, every participant on the Internet is a member of this new media. That's why when I wrote of the Huffington Post success, I pointed to the people who made the success of The Huffington Post possible: everyone who uses the site. And in  the comments there I learned that at least some of the people who contribute to The Huffington Post aren't being paid.

The premise of people not being paid creating value is found in today's article in the New York Times by David Carr - 'At Media Companies, a Nation of Serfs'. There is a real concern about people making money off of the value created by others - it even precedes the BSD-type licensing of software which creates the same issue (Free Software, GPL compatible licensing, does not). People can take BSD-type licensed software, package it in their own way with maybe a single line of code added or changed and sell it as their own.Of course, the old joke for open source business models was, and to a degree remains:

(1) Write code.

(2) ?????

(3) Profit!!!

The joke was - and pretty much remains - that there is no solid definition for number 2. The same is now true for journalism and social media. There is no magic recipe, no silver bullet, no foolproof manner in which to succeed. And oddly enough, the success of TheHuffingtonPost, as it is, seems very similar to that of Linux contributors. Some contributors are paid and some are doing it for free. The key difference is that no one has 'bought' Linux for $315 million dollars.

And that is a little dubious. But maybe part of the magic of TheHuffingtonPost was to draw readers from bloggers - the niches of friends and acquaintances that unpaid bloggers have - to leverage their traffic up. Sure, that must be worth something - but how much?

Nate Silver attempts to find out how much bloggers contribute directly to the Huffington Post traffic in his article, 'The Economics of Blogging And The Huffington Post'. And while he tries to discern the traffic itself, he admits to not being able to analyze solid data - instead creating a method that is better than what might be otherwise available to discern traffic on a site, though there are two things such an analysis pointedly ignores: (1) Comments do not scale to traffic and (2) People who get to a site through a blog post may end up commenting on a different article. Thus, the statistics are dubious at best and are used to demonstrate a point which cannot be demonstrated without better data: That bloggers on Huffington Post have less value than the other content.As such, I dismiss the 'findings' of Mr. Silver  but I acknowledge his premise.

And to that, I have this to say: If unpaid bloggers were not worthwhile, I'm sure that the Huffington Post wouldn't have them. That they have some value is unquestionable. There are solid cases for such value, where a facebook update or a tweet by an unpaid blogger about their latest mix of words and phrases being published and a reader entering the Huffington Post that way. They are in. They see other articles that they like. They read. They watch videos. They are traffic. But what is the value of that traffic?

For the Huffington Post, only the Huffington Post knows the value of that traffic - if they have bothered trying to measure it. It is a fair assumption that they value traffic created by unpaid bloggers simply because they have unpaid bloggers. Whether they can translate that into a meaningful dollar amount is a fair question.

And in the greater scheme of things, David Carr is right. Large media/social networking/social media companies continue to make their money off of the backs of digital serfs who give up some privacy and content - like me - in the hope that the exchange has some value.They clearly have made money from it, thus demonstrating Mr. Carr's point.

And that's why I think the Hedgehog Project, or something like it, is instrumental in at least democratizing the way in which people get paid. But really, people have to be interested first. And so far, they aren't.