The recent sale of Huffington Post to AOL for $ 315 million has focused a lot of attention on the economics of online media. Many seem concerned that the sale of Arianna Huffington’s creation — along with other recent developments, such as the $ 1.5-billion initial public offering of “content farm” Demand Media — means we have entered into a new age of digital sharecropping, in which writers toil for virtually nothing, while landowners such as Ms. Huffington get rich by aggregating that content and selling it to the highest bidder. But is that really such a new thing? All the web has really done (as it has with so many other things) is accelerate and amplify a phenomenon that has long existed in the media game.
The conventional wisdom about The Huffington Post is that the site makes all of its money from unpaid content, and is therefore benefiting from the work of others — and should compensate them, as Dan Gillmor argued not long after the sale. Nate Silver, of the excellent data-analysis blog FiveThirtyEight, took a look at whether this is the case in a recent post, however, and while the data he used is hardly conclusive, it suggests that the site makes more money from the content that it pays for — either the content that Huffington Post’s own salaried employees write or content from other publications that paid editors aggregate and summarize. (These other publications either ask for or allow this, as a Huffington Post staffer noted, in order to promote their content.)
No one has to write for nothing — but plenty do
And what about the rest of the content that isn’t paid for? As Anna Tarkov said recently, no one — least of all Arianna Huffington — is forcing anyone to write for nothing, just as no one is forcing any of the contributors to Demand Media or Associated Content to write for pennies. In the case of The Huffington Post, the site pays reporters to write (and aggregate or summarize) news, but much of the commentary that appears in the form of blog posts is free because the people writing it are happy to trade their content for some non-monetary compensation. Either they get an ego boost from it, or they get to build their reputation or their “brand” somehow. Or, maybe they just like to write.
This bargain doesn’t work for everyone, of course, nor should it. Barry Ritholtz, a well-known financial writer who runs a site called The Big Picture, says in a recent post that he has given up these kinds of arrangements with sites such as Seeking Alpha, TheStreet.com and Business Insider. The alleged benefits that such publishers dangle before writers, he says — including increased traffic to the writer’s website, building a brand and enhancing reputation — don’t really come to pass in most cases.
Obviously, that kind of trade doesn’t work all the time. Some writers may get nothing from that kind of arrangement. But Arianna Huffington didn’t invent this model, nor did Seeking Alpha or any other blog network. Newspapers have managed to build a significant part of their business on top of unpaid freelancers — specifically, the ones who write for the op-ed pages, which are fundamentally identical to the core of The Huffington Post. None of that content, which drives a lot of traffic and comments and other valuable forms of engagement, is paid for. Writers do it because they have an idea they want to pitch, or (in too many cases) because they are self-important and like to hear themselves talk. In other words, the same reasons people write blogs.
There will always be aggregators
All of these writers find ways of monetizing what they do — they get paid for other related services, or they write books or get paid to speak/consult and so on. Even Ritholtz admits that he himself runs a content feature called Think Tank that uses unpaid writers. He argues that his service doesn’t generate as much content as The Huffington Post and is therefore more valuable, and he also notes that he uses writers who don’t need the money, in many cases because they have other paying gigs. That’s exactly who provided a large proportion of The Huffington Post’s unpaid content as well: politicians, business people, stars and semi-celebrities, none of whom really need the money.
In some ways, the AOL-HuffPo merger blends two very different ways of approaching content: AOL’s model, particularly with Seed.com and the assembly-line approach of the AOL Way, is to pay people tiny sums of money for what they produce, and hope to make it up on volume and SEO. The Huffington Post has been largely based on aggregation and becoming a blog platform for those who just can’t be bothered to run their own blog — or who want the free marketing that being part of the HuffPo can bring.
The funny thing about online content, as former eHow owner Josh Hannah noted in contrasting Demand Media’s paid content-farm model with that of free sites like WikiHow, is that you often get better quality content when people write for nothing than you do when you pay them tiny sums of money, as Demand does. In other words, some people are more than willing to write for the recognition and reputation value and sheer passion (or other intangibles) rather than for money. And there will always be media entities like The Huffington Post that take advantage of that. That’s just the way content works.
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Post and thumbnail courtesy of Flickr users David Boyle and Atli Haroarson