Twitter Fight a Symptom of Old vs. New Media

by Mathew on March 27, 2010 · 23 comments

Update 2: Felix now has his own response to Blodget’s tirade, in which he makes many of the same points that I tried to make, including:

Blodget should remind himself on a daily basis that publishers make money by selling readers, not adspace, and that if he’s going to make money, he’s going to have to do so by getting high-value readers that companies want to reach. At the moment, both Blodget and his advertisers are stuck in an increasingly out-of-date paradigm wherein pageviews serve as a proxy for readers, but today, unless you’re Demand Media or the like, that paradigm is doomed.

Update: Elizabeth Spiers, founding editor of Gawker, has come out in favour of Henry Blodget on this one. As she puts it in her Tumblr post:

I don’t agree with everything Henry Blodget has been saying, but between Blodget and Felix Salmon, Blodget sounds like someone who runs/has run a new media business before and Felix sounds like someone who’s never been anywhere near the business side.

She also said that while Felix was a “smart and agile writer,” she thought he was “very naive about the granular economics of an online biz.” In case anyone is keeping score, that makes one Gawker founder and one former Gawker editor on Blodget’s side.

Not content to respond to Felix just once, meanwhile, Henry has responded a second time in this post. Among other things, he says that Salmon’s criticism is unfair because “We’re publishing a huge amount of content that is exactly what this particular critic thinks we should be producing — long, text-heavy analysis, original reporting, and commentary.” And he says he loves slideshows.

Interestingly enough — once again reinforcing his argument about the economics of online publishing — Blodget’s post doesn’t have a URL packed with keywords, but it does have another money-making feature (one I personally loathe): double-underlined pseudo-hyperlinks under certain words that trigger popup advertising windows from a company called Kontera (this kind of gimmick isn’t specific to new media entities, incidentally; the paper I used to work for uses them all the time as well, although I did my best to eradicate them from the website).

Original post: There’s a certain sense of the Roman Coliseum to a good Twitter fight, which typically features two combatants (although others can throw in comments from the sidelines) and an invisible mass of spectators, taking in every uppercut or knife gash and cheering the participants on. Plenty of people crowded around on Friday when a Twitter fight started brewing between Henry Blodget, founder/editor of The Business Insider network of blogs, and Reuters media writer Felix Salmon, and the resulting skirmish was written up by Vanity Fair magazine and The Atlantic, who called it an “epic Twitter tussle” (although Choire Sicha dismissed it as a “snippy little girl-spat”). But beneath the sniping and 140-character witticisms was a real question: What does a successful online media business model look like?

Salmon appears to have started it with a tweet mentioning @hblodget’s business model thus: “Take a story about M&A fees associated with AIG. Illustrate with 2 hot babes kissing. http://bit.ly/dexECw.” (Salmon also took a shot at Blodget and his business model after Blodget fired former Clusterstock editor John Carney). For the full back-and-forth, you can check out the post that Blodget later wrote summarizing his view of the debate (just to rub it in, he turned the back-and-forth tweetstream into a slideshow). During the skirmish, Gawker Media head honcho Nick Denton even waded in with a tweet, saying: “Of course @felixsalmon has such animus to commercial web media: the online audience is so measurable and his so small.”

Blodget’s response itself is like a microcosm of his argument: a careful reader will notice that he stuffed as many potential keywords as he could into the URL of the piece, which uses his name, the word “furious,” the word “attack,” the name of the blog and the term “twitter” (check out this TMZ link on Corey Haim for another example). Both of those features — the slideshow and the URL stuffing — are designed to build traffic, either by boosting pageviews (slideshow) or by improving the likelihood that someone might find the post by searching, or that it would turn up in an aggregator such as Techmeme (in other words, search-engine optimization). So even with his summary of the debate, Blodget was making a point: as far as Business Insider is concerned, pageviews rule.

Salmon also wrote about the Twitter debate, but he stuck to the business issues behind what he was arguing about: namely, whether the model defended by Blodget makes any sense or not. That defence came in a stream of tweets following Blodget’s debate with Salmon, in which he tried to explain how online media works. In a nutshell, he said, such businesses live or die based on CPMs (cost per thousand, the price paid by advertisers per thousand pageviews). If a writer is paid $60,000, Blodget argues, then they have to generate 1.8M pageviews just to pay their salary at a $10 CPM. Hence, presumably, the slideshows and girls kissing.

Salmon argues that this model would work if the site charged the full rate for its ads, but says Business Insider (like many sites) discounts its rates in order to fill all of its pages — for which he blames the ad-sales staff. But is that fair? Not really. For one thing, lots of sites discount from their published “rate card.” But the reality is also that there is so much inventory on the Web that it’s virtually impossible to sell it all, and there is more being produced every day, thanks to places like Demand Media and Associated Content (the latter produces several thousand new pieces of content every *day*). That’s just one reason why relying solely on a bog-standard pageview/CPM-based model is an inherently flawed model.

Later, however, Felix nails it when he says that there are other monetization strategies that can apply apart from just advertising, including “syndication, conferences, stock indices, e-commerce, brand franchising opportunities, wine clubs… you name it.” Of course, there’s also the monetization strategy of selling dedicated terminals with financial data to traders, brokers and bankers, which — as Blodget notes in a tweet — is part of what pays Salmon’s salary. That’s about as old media as a business model can get, and Reuters (like Bloomberg and virtually every other traditional media entity) is also having to confront the disruption of its business model by the Web.

So what are smart online media outlets doing? Two things: One is focusing on building businesses such as conferences and events, as well as subscription-based, proprietary content (something Business Insider is also experimenting with). The other — and this is what I think Salmon was driving at — is thinking about traffic and pageviews in a different way. Not all pageviews are the same, and as a result not all CPMs are the same. Does forcing readers to click through multiple pages to view a slideshow add any real value? No. This is the digital equivalent of newspapers throwing extra copies into a ravine (or dumping them at a taxi stand) to boost circulation.

At some point, online publishers have to decide whether they are pursuing a lowest common denominator strategy of raw pageviews at some bargain-basement, remnant-priced CPM, or a higher-value strategy that focuses on building relationships with readers around content and enhancing that relationship in as many ways as possible. Felix (in Blodget’s view at least) may have the luxury of the Reuters infrastructure and terminal business behind him, but that doesn’t make what he’s saying any less accurate. And I think one of the reasons Henry reacted the way he did is that he knows Salmon is right.

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  • http://twitter.com/Percival Sean Percival

    Old media can't sell blog roll links either! Yay progress!

  • http://www.mathewingram.com/work mathewi

    Good one, Sean :-)

  • Anal_yst

    Solid (hence why I RT'd), but if you'd allow, I'd just like to explicitly say that to which you've alluded (or said in other words): Its not just the # of eyeballs (dummy), its the quality (, as well)!

  • http://www.facebook.com/people/Mathew-Ingram/504597536 Mathew Ingram

    Totally agree — thanks for the comment, and for the re-tweet.

  • http://rexblog.com Rex Hammock

    3 things:

    1. This is not a fight between old and new media. “Page” views as a metric is very much an old media metric.

    2. There are business news websites you've never heard of (that serve niche verticals) who generate more revenues from lead generation and directory listings than Blodget ever will from page-churning slide shows.

    3. To disable Kontera spam, click on “?” of the popup and scroll to bottom of page it takes you to.

  • http://www.mathewingram.com/work mathewi

    Thanks as always for the help, Rex. But I disagree that this isn't
    about new vs. old media — pageviews may be roughly equivalent to
    readership or circulation as a metaphor, but I think you'd agree that
    the measurability and micro-managing of metrics that is possible on a
    story by story and click by click (and minute by minute) basis online
    has no real analogue in traditional media. And that changes the game
    in all kinds of ways.

  • http://rexblog.com Rex Hammock

    Yes, I agree. I was very specific when I said “pageviews” was an old-media metrics. Like print, it's all a charge-per-eyeball, with no measure of outcome or action. And it's all based on an old-media CPM model.

    I was specifically referring to two things: (a) The page-churning techniques of slide-shows to gin-up page views. (2) The part of the argument-thread that related to the number of page views that were necessary to justify a writer.

    “Clicks” are another thing, altogether. “Time spent” is another thing altogether.

    On those and other performance-based metrics available online, I agree: new-media metrics.

  • http://www.mathewingram.com/work mathewi

    That's a good point, Rex — pageviews are a very old-fashioned metric
    in that sense, because they are just a raw measure of eyeballs. No
    targeting, no specifics, no measure of important things like time
    spent, repeat visits, etc. — things that might actually show
    engagement with the content.

  • http://joeclark.org/weblogs/ Joe Clark

    To be more accurate, which is hardly your stock in trade, you failed to eliminate Kontera ads from the Globe and Mail Web site. (After all, you “did [your] best.”)

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  • http://www.facebook.com/michael.tippett Michael Tippett

    Mathew,

    The question that nobody ever asks or answers in the debate between traffic and quality readership is how the quality of the readership plays out in the PV x RPM math in practice (vs. theory).

    For example, lets say that the RPM for a well defined, loyal, engaged audience is $14 (to be generous) and a SEO driven audience is only a $2 RPM. So the question is, is your low value SEO derived audience 7 times bigger than your high value audience?

    If the answer to this question is yes, then the actual value of an engaged, loyal readership is in fact lower than your low value audience.

    Best, M.

  • http://www.mathewingram.com/work mathewi

    That's a fair point, Michael — and I think there will always be sites that can make just as much or more with large volumes of SEO-derived or “drive-by” audience numbers. But I don't think there will be very many of them, so if you aren't running one already you have your work cut out for you :-)

    Ideally, of course, you would have some higher-quality sites with really engaged readers for which you charge a premium, as well as some low-quality, drive-by sites that pull in big numbers.

  • http://rexblog.com Rex Hammock

    When it comes to business information and business-oriented media, I believe the best proxy-metric for the “value of the content a writer produces” is the click-through rate of PPC text ads. (The % of page visitors who click onto a text ad that appears on the page).

    While the banner-ad people can argue “branding” is valuable even when there's no click (that's worked for them for a century in traditional media), the click through rate provides continuous research in the value of a specific page's content.

    It also demonstrates that the reader is actively engaged with the advertising, as well as the editorial content, of the page. The demonstration of such engagement is an endorsement of the quality the reader/user places on the site — or the writer.

    Compare the click-thru rates of two similar sites and I can tell you which I'd rather advertise on, no matter what the page-view traffic is.

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  • http://www.seomoz.org/marketplace/companies/view/2548 Mohan Chakraborti

    there will be always a clash when things are changing it will diminish as the time goes

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    Oh Twitter. you cause so many issues. ;-)

  • http://www.virtualforexstore.com Virtual Store

    Totally Agree to the Post. Old Media Cant sell the blog roll links at all.

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