Wednesday, July 23, 2008

Where the (profitable) blogosphere ends

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My buddy Rob pointed me to this great blog post about how hard it is to earn money from blogging. There are a lot of really great economic analyses at work here, but what it really comes down to is this: Too many people are chasing too few dollars for anyone to make a living.

The whole point of blogging is to democratize Web publishing. The barrier to entry is so low that almost anybody can blog, so almost everybody (seemingly) does. Ironically, there's a whole universe of people auditioning to be the next Robert Scoble when Scoble himself (according to the article) is having trouble making money at what he does.

Doubly ironic, as a guy who makes part of his living blogging, I'm happy about this. Here's why.

There are four areas of competition for any product or service in a capitalist system: Product (quality), Price (cost), Promotion (awareness), Placement (convenience). Do I know something exists, is it worth buying, at what price, and where can I get it?

On the Internet, there are really only 1.5 avenues of competition.

Placement online is nonexistent, as anything on the Internet is available everywhere on the Internet, barring some national censorship or workplace ISP filters. The price for content is free, as anyone who tries to charge for content has more or less failed. So that leaves Product and Promotion, and I think promotion is really only half an avenue of competition anymore.

Another buddy, Jason Falls, argues that promotion is where the next big fight is online. That's why everyone is nuts over Twitter and Facebook and, until recently, blogs--they're a new, untapped avenue for promotion. But they're promoting offline goods online. They're middlemen. So what promotes these social media goods and services? Search.

David Weiner at Eyeball Economy argues that Search-based promotion will soon be a core Public Relations function, even as it is already a Marketing/Advertising function. Falls argues the same thing about Social Media--PR should run it. I don't entirely agree for many reasons, but here's why I don't think search engine optimization and gaming social media will be as big a fight as everyone claims: TechMeme.

TechMeme and its brethren autoblogs has automated the process that Fark, Digg and BoingBoing do manually--selecting cool and popular stuff for a specific audience. Google News operates similarly. While I'll never concede that automated aggregation will be of higher quality than human-chosen aggregation, it's already good enough to compete and will only get better. Just as with SEO, I foresee an arms race of PR-trained techies out there trying to find new ways to game these automated systems, and engineers countering the gaming, such that wild swings or radical successes are rare. Filtering out the "good stuff" from the democratized Web will only get easier for content consumers, which is a good thing for readers and rough for promoters and bloggers.

So where does that leave us bloggers looking to make a dime? With no choice but to be the good stuff. The Web is inching towards forcing everyone, everywhere to compete on quality as applies to content. The good stuff will get aggregated. The good stuff will get consumed. The good stuff will get monetized. The people who consistently make the good stuff will get paid, which is good and bad.

Quality content requires quality content creators. In other words, talent. And here's the scary part: Talent doesn't scale.

You can't turn one good blogger into five good bloggers by throwing more servers at the problem. You have to go out and find, groom, and pay five good bloggers. And there's rarely a magic formula for finding them. They're a rare commodity, but those that can do the job can expect that in the near future they'll be paid their true worth for the service.

That said, it's not enough to be first anymore, because any blog worth doing is going to have hordes of amateur competitors out there doing it for the love, not the money, and occasionally doing it faster or better than you. The secret will be in consistency of quality--being good often enough to assure regular readership and regular monetization. Success will be hard. Success will be expensive. Success will be slow. But I'm betting the payoff will be worth it.
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