The Software Abstractions Blog

Indirect Business Models for Blogs

Fred Wilson wrote an interesting post yesterday on the A VC blog: The Long Tail Of Business Models , in response to an earlier article about Media Business Models by Chris Anderson, who first popularized the Long Tail concept.

In his post, Wilson gives us a long list of monetization strategies for FREE content, such as blogs; some of which are very popular strategies and others not so much. A few of the less common ones are reproduced below:

• Lead generation (you pay for qualified names of potential customers)
• Subscription revenues
• Rental of subscriber lists
• Licensing of brand (people pay to use a media brand as implied endorsement)
• Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
• Live events

• Cost Per Install (popular with top Facebook apps who can help others get installs)
• Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
• Listings (paying a time based amount to list something like a job or real estate on your website)
• Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
• Streaming Video Advertising (like streaming audio but in video)
• API Fees (charging third parties to access your API)

The full list is available in his post. Overall, this is extremely valuable for any publisher of free content.

To Wilson's list, I would add the following strategies for generating indirect revenue - i.e. more in line with Business Development. These strategies are not directly monetizable, but equally real all the same, and can be converted into actual income with a bit of effort.

Indirect Revenue Strategies for Blogs

• Lead-In to Consulting Business; this is more specific than, but a subset of, generic referrals and lead generation
• Book Writing Opportunities; your blog allows you to gain credibility, build an audience and interact directly with your readers
• Lead-In to Education Business, such as Classes and Webinars
• Gather Market Intelligence, using Polls, Surveys, Feedback et al
• Networking (in the good sense of the word) - you can find others with similar thoughts and interests
• Define your own Viral Meme; for example, here's one viral term: "Web 2.0"

In addition, of course, there are the intangibles, such as name recognition for authors, increased visibility for brands and fresh content - which equates to increased traffic and SEO benefits - for publishers.

If you know of any additional ideas for indirect monetization, please leave a comment below (or comment on either of the main articles referred to).

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Techmeme: Web 2.0 Discovery, with a Web 1.0 twist!

Jeremiah Owyang wrote an interesting post yesterday: The Five Members of the Techmeme Family - in which he lists the different types of bloggers that end up on Techmeme. I think he's right on the money; as an avid follower of the site, I've seen the same dynamics at play.

For technology watchers and bloggers, Techmeme is a gold mine, an invaluable resource that constantly highlights breaking news, unique perspectives and interesting blog posts. Through the site, I've discovered some amazing writers and their high-quality work: Scott Karp on Can Blogs Do Journalism? , Fred Wilson's incisive post - What My Kids Tell Me About The Future of Media , Jeremy Liew's ongoing series about the Semantic Web - Meaning = Data + Structure , Dale Dougherty's wonderful post on Journalism is Burning Or How Breaking News is Broken and so many others.

In his post, Owyang also looks at how posts are rated on Techmeme. What's interesting about it is that the person who breaks the story does not necessarily get the lead; a more mainstream news source or blogger often becomes the "top node", even if all he or she is doing is to repeat the story without any additional content or unique insight. This is a reasonable approach from an automated content discovery perspective, but it sometimes gives funny results.

As Owyang says:

...

The Breaker: This can be mainstream news source or a mainstream blogger that discovers the story from the Original News Source and blogs it, as a result, they often become the top node, even if they aren’t the original source. It seems as if some websites are naturally geared to be an “H1″ even if they are resonators.

The Resonator: Also referred to as those who echo or copy, they repeat what was already said, adding little or no additional content, news or opinion.

...

As an example, consider this Techmeme snapshot from 5:55 PM ET, December 31, 2007 - the image below shows a fragment of that page.

At that time, the big news of the moment was about an executive defection, er, employment change - Steve Souders, Chief Performance Yahoo, left his post at Yahoo! to join Google.

What is interesting to note is the ordering of the various stories on the Techmeme web site.

The lead story on this topic is the Silicon Alley Insider post by Henry Blodget - an A-list blogger. Now, Mr. Blodget is a fine writer and SAI is a great blog, but this particular story that leads is written mostly as a breaking-news flash, with minimal opinion and no particular startling insights. (Where is the story behind the story ?)

However, the story had already been broken by techno.blog on the previous day (according to the respective blog post time stamps), so it wasn't really breaking news by the time it appeared on Silicon Alley Insider. And others - for example, Donna Bogatin and Ashkan Karbasfrooshan - provide a lot more additional content and, arguably, much more insight. So how did the big-T pick Blodget's post as the lead?

My belief is that the Techmeme algorithms choose their lead based on the prominence of the source and on the links to a given post (which two factors are generally highly correlated, in any case).

This is fine and generally works well. Are there other options, other algorithms that can be used to choose the lead for a developing story, that could highlight the more meaty posts? A few possibilities come to mind:

• Reader Votes: Within the set of posts for a developing story, allow readers to vote for the ones they like best, so that the most popular ones rise to the top.
• Link Count: Examine the cross-linking between posts to leverage the implicit knowledge therein, similar to Google's PageRank algorithm. I believe Techmeme already incorporates this to some extent.
• Bookmark Count: Examine the incidence of social bookmarks for different posts, for popular bookmarking services like del.icio.us .
• Human Editors: Use human editors to select the top leads. Of course, this may prove too expensive and/or cumbersome.
• Author Markup: Enable authors to include metadata in some standard format for their posts. By using markup or tags such as "news", "opinion", "analysis", "multi-idea" and so on, authors could indicate the type of their post to the selection engine. Admittedly, this approach is susceptible to gaming, although it could be combined with voting to improve quality.

Over time, the significance of "prominence" as a measure of content quality is eroding - especially for blog posts in particular. As the web evolves, Techmeme and other sites are sure to experiment with these and other alternative approaches; it will be interesting to see which ones emerge as the winners.

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A conversation with Guy Kawasaki of Garage Technology Ventures

There is no need to introduce Guy Kawasaki - Evangelist, VC, Blogger and long-time Silicon Valley icon. His latest venture is called Truemors (here's the Software Abstractions review ) - a digg-like social network for headlines and short posts. Recently, I had the opportunity to get his thoughts via email on a variety of topics - our (electronic) conversation is reproduced below.

 

Q - Congratulations on your new startup, Truemors, which seems to be doing very well. What attracted you to this particular idea, out of the hundreds of potential candidate ideas out there?

GK - I was inspired by three events: Listening to James Hong explain how he created HotorNot; SpinVox enabling people to post blog entries via voicemail; and the success of Twitter. I love the concept of the democratization of information, so when I put all four together, I came up with Truemors.

Q - What is your business model for Truemors ?

GK - Hopefully we'll attract enough page views to sell advertising and sponsorships in significant amounts.

Q - How will Truemors differentiate itself from established social headline sites like Digg, Reddit et al?

GK - Digg, Reddit, et al are mechanisms for people to rate content. Truemors is a way to generate content. In an ideal world, people will start Digging our content and drive up our page views.

Q - What do you make of the mostly negative opinions of the blogosphere about Truemors?

GK - First, don't exaggerate. The feedback hasn't been "mostly" negative. It's been totally, unequivocally negative. :-) One of the consequences of the democratization of information is that you have to be able to take the Heat. So my reaction is, We shall see. Maybe they are right. Maybe they are wrong. But you never know unless you try.

Q - You've been an active blogger for a while now. What has your blogging experience been like?

GK - Very, very gratifying. I like working without having to get approval and waiting for publication. "I blog, therefore, I am," is my new mantra. I'm #15 or 16 right on Technorati now. My stated goal when I started blogging was to be in the top ten, so I've been fortunate.

Q - What type of key differentiators do you look for in your investments through Garage.com (now Garage Technology Ventures)?

GK - We're looking for two guys/gals on the West Coast who are trying to change the world with a software, IT, or clean-tech startup. We're a small fund so we don't participate in companies that need $25 million to break even or build a factory.

Q - What are the two or three most influential business books you've read?

GK - If You Want to Write by Brenda Ueland, Influence by Robert Cialdini, and Crossing the Chasm by Geoffrey Moore.

Q - Who are your business heroes?

GK - James Hong of HotorNot and Markus Frind of PlentyofFish. I love how they turned nothing into a big something.

Q - It always amazes me that Apple users - the so-called "Mac faithful" - have displayed such fierce loyalty to Apple through all of the travails and even mis-steps of the company; now the wheel has turned full circle, and Apple is back on top.
What do you think is the "secret sauce" that inspires such passion and loyalty in Apple users?

GK - There's no secret sauce. It's purely engineering. When Apple makes stuff that people like, it does well. When it doesn't, it doesn't.

Q - Do you think the iPhone will    succeed wildly   or    fail miserably ?

GK - It's too early to tell. Basically everyone is conjecturing how good or bad it will be without having used it--unless you're Walt Mossberg and Apple is sucking up to you.

Certainly the first million or so will fly out of the stores, but so did the first 250,000 Macs. Then the hard work really begins: battery life, no keyboard, durability of the screen, ATT's sucky data network, size and weight, lack of Exchange server (I can't believe I'm saying this too!), price point (a mere 20-30x more than a Razr), cancellation fee of your current plan (unless your two-year anniversary happens to be June 29th).

Still, when all is said and done, it's very dumb to bet against Steve.

Q - What message would you give to would-be entrepreneurs out there?

GK - Asking bloggers about anything beyond tools for bloggers is dubious as a feedback mechanism. Whatever the blogosphere says, do the opposite. [Ed: Aw, gee, thanks for the compliment!   Not! ;-)]

Q - In one sentence, what's your core philosophy?

GK - "Empower entrepreneurs."

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Feeding your pet bloggers - Bribery? Or just good business?

The controversy about blogging ethics and payment took an interesting turn this week. Briefly, Microsoft has started mailing brand new Acer Ferrari notebook computers as gifts to bloggers who write about Microsoft. Several bloggers have written about it on their blogs . The discussion centers around the ethical issues for bloggers who get and keep these gifts. [Side note: the PR for the new Microsoft Vista OS is being handled by none other than Edelman, the folks who brought you the flogger controversy  .]

Note that the bloggers in question did not ask for these gifts, nor are these payments in the sense of PayPerPost - the bloggers did not sign any contracts to write favorably about Microsoft products, although of course, the laptops went to bloggers who regularly write about Microsoft. Also, arguably, the laptops and their pre-installed Windows Vista operating systems could be considered "sample products"; but the laptops are gifts rather than loaners, and probably more valuable and directly useful in their daily work, compared to say a sample copy of a software game.

The question is: should companies do this? And should bloggers accept these gifts?

From the corporate side, I think the answer is easy - it makes good business sense, pure and simple, as long as it is not underhanded. If I had a product company, I would certainly want to send gifts to bloggers who write about my company (especially sympathetic pieces). Since many bloggers work independently rather than within the folds of a large corporate umbrella, you can send them gifts at a fraction of your PR budget, and even small blogs, depending on the demographics of their audience, can have a remarkable impact and influence buyers' opinions. For a business, it's an effective way of getting influential PR at a fraction of the cost, as long as the gift is not disproportionately valuable - the gift-giving should appear tasteful rather than unsavory.

From the blogger's perspective, however, things are a little more murky. Credibility, one of the key assets of a blogger or indeed, of any reporter, is inherently fragile (yes, even at large, reputable newspapers ). If a blogger starts accepting gifts, how much would credibility be affected? After all, nothing remains secret for long in the blogosphere. Although, it should be noted that this happens more or less in every domain - celebrity sports figures, fashion figures, and I imagine, those who report on them, all get "comps". Certainly no respectable journalist would accept payment for a story. But can journalists accept presents, say holiday gifts? I have no idea, I hope that a professional journalist from one of the bigger news providers joins the discussion to give us feedback on that.

So - should a blogger accept gifts from a company he or she writes about? While this is admittedly a gray area, on balance, I think I don't have a problem with it, as long as the gift or payment is strictly and clearly spelled out on the blog (i.e. a footnote in size-6 font in the bottom-right corner doesn't count). This would allow readers to explicitly take the bias into account for those posts, while preserving the credibility of the blogger for the remaining posts. As an analogy, let's say Katie Couric appeared in a late-night program that was clearly an infomercial - not that that would happen - I wouldn't necessarily discount her stories on the CBS Evening News simply for that reason. Would you?

The Significance of Blog Marketing

The Internet has changed the face of Marketing. Although the basic principles of marketing and sales are essentially timeless, Internet technologies have provided marketers with a variety of new techniques to connect to and interact with new and existing customers.

The last couple of years have seen an increased focus on a brand-new channel: corporate blogs. This is a potent marketing tool, especially as a mechanism for starting a dialog with users. There are many ways to leverage corporate blogs:

  1. Customer Interaction and feedback

Blogs can serve as an extended marketing channel to reach out to users. Unlike typical marketing communications, a blog is informal, interactive (two-way communication is almost a given) and timely - it's a great way to get user feedback and keep a finger on the pulse of user sentiment about your products and services.

  2. A sense of community

A blog can be used to foster a greater sense of community among your user base. Attracting a core group of readers can serve as a jumping-off point to create user groups and forums ("users helping users!") and build a loyal following among your customers.

  3. A "push" mechanism, to supplement or replace Email Marketing

Email marketing has some well-known problems, and is becoming increasingly ineffective as a way to communicate with customers. What is needed is a "push" mechanism, that combines the advantages of a subscription channel to express interest in a given area, with the ease-of-use of an online newspaper (no organize/delete actions are necessary to prevent inbox flooding!). Most blogs support RSS/Atom feeds, which provide exactly such a push mechanism.

  4. Attract links and improve SEO rankings

One of the attributes that makes blogging special is the heavy interaction among content creators within the blogging community. There is typically a high level of hyperlinking between blogs related to a given industry or area of interest, and it is quite common to have widespread, ongoing discussions about key topics in that area across a cross-section of blogs - e.g. a blogger will post an article about a controversial subject (known among bloggers as "link bait"), and another blogger will respond with a different perspective in a different blog, which is then taken up by a third blogger, and so on. All this heavy url linking between blogs has a very positive effect on SEO rankings.

  5. Control buzz

Blogs provide a rapid and effective way to generate, and more importantly, control buzz about your company, product or service. The blogging community tends to be at the forefront of cutting-edge technologies and solutions - if you have a new product or service coming up with exciting, "cool" features, creating some excitement within the blogosphere is a terrific way to quickly generate buzz and get lots of free, credible, word-of-mouth publicity.
At the same time, a corporate blog can provide an informal channel to enable a rapid response to a crisis, before negative publicity can spin out of control - a heartfelt apology by the CEO, for example, can get additional credibility in a blog post, because of the personal, informal tone.

 

So how do you convince your boss that your company needs a blog? You can argue the Top 16 Reasons to start an external corporate blog. Alternatively, you can start your own blog to discuss thoughts and news in your business area - most blog packages are free, and the time commitment is not large, as long as you post regularly! In the early days, there was a strong sense that a blog needed daily posts to be effective, but unless you want to be in the Technorati Top 50, that's not really necessary.

Once you have your own blog, as you start to collect a regular reader base, you will automatically gain credibility and be seen as a thought leader in your area. When your company eventually starts a blog - and they will - you will have a pre-existing high-authority blog that can be used to jump-start it and to boost its credibility, and you'll become an instant corporate hero!

Note: If you do intend to share your blog with your boss and with your company, then you should be careful to avoid the sins listed in Top 5 Mistakes to avoid in an external corporate blog; in general, it's a fairly good idea to avoid these even in a personal blog, unless there's a reason not to.

 

 

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