Performance-Based Pay For Content Has Gone Mainstream -- Which Is Probably Good For Authors

 

This week Forbes magazine again touted its success with the business model it calls Entrepreneurial Journalism, without so much as a titter (or a twitter) from the media. Forbes’ journalism model, pioneered (then dropped, then readopted) by Nick Denton at Gawker Media, was very recently considered a controversial and even a heretical approach for journalists.  The value proposition, however, is deceptively simple and makes sense: Pay writers bonuses based on the audiences they can attract. 

The model makes sense to any MBA, because it directly aligns the value created by the author to the value realized by the advertiser.  As long as your marginal revenue exceeds your marginal costs for every article, well, you can just feed the beast -- and focus on scale. 

Writers, however, generally consider it anathema, due to three basic objections:

1. Risk. The biggest problem is that performance-based pay shifts nearly all of the risks on to the writer -- many of which have been out of their control.   How can writers control whether publishers promote their content on the home page, have a decent page rank, or promote content in newsletters? 

2. Quality. The second issue, which flows from the first, is quality. When most of the value earned by the writer is based on performance, the writer is essentially making a bet with his content. The content may earn him a windfall, but it may just amount to pennies.  The writer thus has an incentive to place as many cheap bets as possible.

In the distant past of the “content farm” era  (a year ago) sites like Demand Media and Associated Content became a kind of content casino, where writers could place a number of cheap 20- to 30-minute bets on a search term -- and gamble that revenues might pour in.

Hey, you never know.

The collective reaction to this proliferation of cheap content was predictable: accusing fingers pointed at Google, accompanied by loud sniffing of noses.   Pay-for-performance caught some of this association: a stigma of a down-market approach, which is nevertheless practiced quietly by many of today’s successful online publishers.

3. Stigma.  That stigma added to the final hurdle about pay-for-performance:  Many writers simply find it distasteful to have to promote themselves or, shudder, write for search engines.   They aver that distribution is supposed to be the publisher’s job and that the quality of their content should speak for itself. 

These authors may need to change their minds and start building up their Facebook friends, Twitter followers, and especially G+ circles, because authors are rapidly becoming the primary driver of content distribution. 

Authors.  Not keywords. Not quality.  Not search relevance.  Not domain rank, and not the publisher’s brand.

I am not just talking about social. As of last week, if you followed an author on Google+, when you search for a topic, an article from an author you follow will show up first. Google has decided that authors you like (or that a lot of other people like) are the most relevant search results.  That's search -- and of course you may also encounter the author’s articles on Facebook, Twitter, or her blog feed. 

If authors drive distribution, the objections above are mitigated considerably. The risk goes away, because authors will control and predict how many people will visit their content.  If they know they are likely to get a core audience, they can then write fewer, higher-quality pieces. And if the content is good, objection three disappears, because the authors will be proud of their work.

Smart publishers like Forbes are hoping their reputation and brand will continue to attract authors with audiences -- just as Arianna H grew her content empire based on bloggers who wanted to associate with her personal brand.

But the authors who are even smarter about their audience and following may just use these outlets to build their audiences to monetize in other ways.

In either case, authors who can begin to move an audience are going to be able to write their own ticket on many different sites -- a ticket that will be paid on performance. Eventually this has to be the dominant model. Any approach that doesn’t create an incentive for the author to promote their content leaves value on the table.  The future of journalism is indeed entrepreneurial. 

But publishers may not want to breathe too easily. These authors with audiences are going to be much harder to retain.  And a new entrant is rapidly emerging that is gearing to compete head to head for the same audiences by creating content.  Not only is this competitor much more willing to pay for those audiences, but also happens to be footing the advertising bill that drives the publisher’s business:  brands.

 

 

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3 comments about "Performance-Based Pay For Content Has Gone Mainstream -- Which Is Probably Good For Authors".
  1. M D from Start! Communications , January 27, 2012 at 11:54 a.m.
    Point 4: While the model has some obvious charm, the monetization of journalism will also reward demogogues who cater to the masses ($$$) rather than those who labor to provide the "boring but important" information that informs public debate and is the basis of a democratic form of government. Wouldn't it be funny if sophisticated corporate PR machines found a way to monetize their submissions online? We rely on editors for reliable information, I'm not convinced that entirely crowd-sourced "popularity contests" will provide the information we need.
  2. Andrew Boer from MovableMedia , January 27, 2012 at 12:33 p.m.
    MD -- you make a valid point about demagoguery -- although I'd argue that the major news outlets already encourage demagoguery at the organization level -- in pursuit of profits. I do question the notion of "boring but important" news as something we should endeavor to sustain. If it is indeed important-- it should find an audience -- and talented writers with audiences can make the most mundane subjects interesting.
  3. John Ribbler from Media Pro, Inc. , January 27, 2012 at 1:25 p.m.
    An historical perspective is needed to get beyond the babble over who is winning and who is losing (or who should win/lose and why) as channels of communication change and evolve. The period during which a limited number of publishers provided well-paid employment for a significant number of writers was fairly short, less than 100 years. Before the 20th century, thousands of publisher-writers were responsible for most journalism. The only successful writers were those whose pieces were directly responsible for increases in circulation. Edgar Allan Poe and Charles Dickens are the first that come to mind. In the 1900s, newspapers consolidated and monopolized markets. Their vast wealth and power allowed them to establish standards for professional writing. Successful journalists were blind to (or downplayed) the fact that their success and respectability had more to do with fitting a mold than their talent as writers. In all other times, the news business was typified by demagoguery and competition was nothing more than a popularity contest. The media landscape today is much more similar to the middle of the 19th century when dozens of daily newspapers and hundreds of weeklies were published in New York City. Writers trying to make a living were faced with the same risks, conflicts, stigmas and other issues that Andrew suggests. Only the most popular made careers out of it.