On the internet, stories increase in value over time, rather than disappearing, the way they do in printed newspapers and magazines:

In a weird way, [the internet] completely inverts the calculus of news, which is that the new stuff is what matters and the old stuff doesn’t matter — because the good old stuff gets more relevant over time as more people flag it and link to it.

I guess this is the Long Tail of news, except it’s an interesting shape. Online, news lasts forever. You could say that the most influential articles online are the short head, and the rest of what gets written is part of the tail. Time — when the piece was written — is only a small part of the equation.

The home page is dead:

The day that you could, as a media organisation, expect people to come to your home page, to navigate to news within your site, make you a part of their daily routine — that day is going.

Increasingly people are going to be getting their news from a broad menu of many sites. You can’t expect them to come necessarily to your home page. They will be coming, instead, to individual stories that they find out about in any number of ways — possibly from a blog, possibly from another site, or from Google.

People aren’t visiting websites any more. They’re dipping into stories, flipping back, skimming through. Internet ‘surfing’ is alive and well, as much as the advertisers and advertising managers on mainstream sites might wish it were otherwise.

Your blog won’t make as much money as a successful print publication:

No single blog that we start is going to generate significant revenues in terms of advertising.

QFT.

Why people read blogs as an alternative to mainstream media:

Mainstream interests are often served well by mainstream media, but niche interests are usually not served at all by mainstream media. And that’s a case where the blogosphere is basically filling that gap, and that’s why I prefer it for those subjects.

A lot of the time mainstream media also makes a pretty hamfisted job of covering niche interests. Online, you can find experts on anything. Most journalists are generalists, on the other hand.

Is blogging journalism, and should anyone care:

Fundamentally, it doesn’t matter what journalists think — this is happening anyway.

Blogs have an extraordinarily wide spectrum of styles and technique and it’s not like our world, and yet it’s competing with our world for readership.

The whole citizen vs. professional journalism thing is a red herring, as I see it. If people write interesting, useful stuff then they have got my vote. I don’t care if they are NCTJ accredited. For useful information, I don’t even care if it’s well-written. (Watch a short documentary about citizen journalism here).

How journalistic style might change as a result:

I think the AP style, which has become New York Times style, has dominated the culture of journalism in the US as one of objectivity or being dispassionate, is going to evolve simply because they’re [in] competition from very passionate voices.

An interesting idea. But not always true. A lot of bloggers model their style on what they’re used to in newspapers. Be nice to see a bit more excitement in the papers, though…

Click fraud occurs in pay per click [PPC] online advertising when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating an improper charge per click. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud whether they like it or not.

So basically, advertisers are paying Google, Yahoo and other publishers money for every time someone clicks on their advert. Obviously, if you’re an advertiser, you’d hope that someone clicking on your advert means that person is interested in your products and services. Unfortunately, there are people who click on adverts or write software to click on adverts that have no interest whatsoever in whatever you’re selling. This has led to some very bold scare stories about PPC being doomed, the end of western civilisation and other such tosh.

It’s annoying to waste your advertising budget in any way whatsoever, but it’s part of the game. Advertising is about speculation: you can’t avoid it. “Half the money I spend on advertising is wasted. The trouble is I don’t know which half,” said Lord Leverhulme (or David Ogilvy or John Wanamaker — it’s a bone of contention). That statement has been true for a long time and it’s only PPC that’s ever helped business owners pick the right 50%.

Pay-per-click advertising is different from old media. It’s a lot more secure than advertising in a newspaper, magazine or broadcast. Advertise in a daily paper with a circulation of 1mn readers and they’ll charge you $80,000 for a page. You’ve got no idea of the ROI until you try it out. If the newspaper doesn’t reach the sort of people who buy from you or your advert is rubbish, then you’ll get nothing back. If they aren’t in the mood to buy things then they will flick straight past the advert. The advertiser doesn’t get his/her money back in that case either. Why on earth are people suggesting they should get refunds from Google and Yahoo?

With pay-per-click, apart from the click-frauders, the only thing that advertisers really pay for are potentially interested customers. The economical efficiency of that compared to old media is staggering. When Eric Schmidt was asked by ZDNet whether he thought click-fraud would slow the growth of PPC advertising and Google, of course, he said no. It never will, because despite the scare stories, it works very well.

Think through the sums. With traditional advertising, $80,000 buys you a presence in front of a million newspaper readers or a 30-second TV spot. You have no idea if any of them will respond or whether you got your messaging right. If you spend $80,000 dollars on AdWords or Yahoo, on the other hand, then you get the exposure anyway and that’s almost free. Totally free normally. Because the ads are published on the basis of relevant context, then you’re almost guaranteed the sort of audience you want. The thing you pay heavily for is clicks: the equivalent of phonecalls from your newspaper advert. Let’s go overboard and say that half of those clicks are fraudulent. That’s wayyyy higher than it really is, but let’s suppose that 50% of the clicks you got were generated by a machine. So what? You’re still getting massively increased efficiencies compared to the old model. Because of the scare stories, the networks are extremely vigilant in hunting click-fraud, so I really believe it will never represent a large fraction of an advertiser’s traffic. It’s just not in the networks’ interest so they’ll work it out.

Traditional media won’t sell you advertising on a response basis as a new customer. Probably they never will. They are in business too. They can’t take the risk that the advertiser has produced an effective piece of copy, or that they know their customers well-enough to select your publication because it will work. The advertisers themselves have almost no idea until they try it. The only reason Overture or AdSense exists is because of the explosion of internet sites. The number of blogs doubling every six months. If you’re the thousandth most-visited site about technology, and most are a lot lower than that, then you might still get decent traffic, but you won’t get an interview with an advertising agency. They have 999 other technology sites to contend with that are more important than you.

Nobody in this argument is thinking about the Long Tail of internet sites that are providing this terrific value. The ones that are 1000+ on the rankings. These are the networks’ lifeblood because the owners can’t get brand advertising on their sites. When will those people get fed up and stop offering such cheap rates, I wonder? When they realise that a couple of dollars a month is an insult to the effort they’re putting in and the audiences they’re getting? The proposed introduction of Cost-Per-Action advertising might spell the end of this particular bandwagon.

Perhaps the next step is about the distribution of brand advertising. Giving PowerPoint presentations to a bunch of ad agency guys is old hat. It just isn’t efficient any more. There are too many viable, cheap, relevant media outlets to allow for it. What we still don’t know, I think, is the next best thing.

I have used information from some excellent work done by Dion Hinchcliffe and specifically one of his blogs ‘Creating real business value with Web 2.0’

a) The resurgent adverting model driven by rich media and broadband. Once dismissed, the ad
sponsored model is back with a bang! The software industry is about a $40 billion a year industry.
Advertising is worth about ten times as much and its all moving online(hence witness newspapers in
financial quagmire).

b) To re-emphasise, the monetization of the long tail is critical in a web 2.0 business model

c) Gaining control of a hard to create data source and then being able to successfully monetise it(for example: www.craigslist.com)

d) Web services including mashups: amazon.com is the best example. Currently estimated to be earning Amazon $211 million a year. The Amazon web services model ‘decentralises’ the store by converting the store itself into an open, easy to use platform.

(NB: This is only a small portion of Ajit’s post, for reasons of space. I recommend that you read the whole thing — it’s interesting and succinct).

However, I think he’s wrong.

The ad-sponsored model may be back with a vengeance, but the only people making money out of it are Google and Yahoo! investors. The ‘long tail’ with their 1000 visitors will not be able to give up the day job soon on their $5 a week. The vast majority of bloggers are making a lot less than this from advertising. The only reason blogs carry Google ads is because they don’t really have a lot of other options. Given that maintaining their blog is driven by other ambitions: personal satisfaction, communication with family and friends, personal branding, etc, then this lack of ad revenue is acceptable. But could 99% of blog writers fund themselves from blogs on their sites? I don’t think so.

Similarly, while I am sure that Amazon makes a lot of extra money from mash-ups, but how much are the creators of those applications making? I really have no idea, but I suspect they make a lot less than Amazon.

Like a lot of arguments, this is all about semantics. Ajit believes that a successful Web 2.0 business must “monetise the long tail”. Hmm. That seems to restrict Web 2.0 to companies that can generate millions of eyeballs at a very low cost. Even then, it is problematic. I’m inclined to believe that some of the highest profile, ad-funded Web 2.0 properties (MySpace, YouTube, any other social networking/bookmarking site you can mention) is struggling to make their ad sales higher than the cost of maintaining their respective networks. I can see that Google, Yahoo! and Amazon are making money from the long tail. But are these Web 2.0 ventures? Or are they traditional businesses who have adapted very cleverly to the new trends in web traffic? (That was rhetorical ;))

So, the money. Where is it? Well, I don’t really think that bloggers will get anything significant unless they become part of larger networks like Gawker and Weblogs, with sufficient funding to employ a sales department and pitch for display advertising. Sorry about that, rest of the blogosphere, but really, who is going to advertise on a site with 1000 views a day except on a CPC basis? Consumer web applications like bloglines have an even harder job than bloggers getting display advertising, except through virtue of their large user numbers, which means they’ll be receiving the lowest rates imaginable from advertisers. I’ve spoken to a number of people running such services and a lot of them think that paid-for models will (a) give them a sensible revenue stream; (b) make their users value the service more and © create a more attractive model for advertisers. And social networks and user-generated media sites will need to tame the anarchic vibe and stamp down on child safety if they’re to see solid investment from corporate advertisers. Otherwise, they could charge a membership for those who don’t want their crazzzy network pulled into line by the Man.

Does this cross the line into traditional business rather than Web 2.0 business? Maybe. But if I owned one of these companies, that really wouldn’t keep me up at night. Being a Web 2.0 business doesn’t give you a license to run at a loss, I’m afraid to say, so get over it. In any case, as Anthony Mayfield has recently pointed out, many of these ‘wisdom of crowds’ services obey a 1% rule. That is to say, one percent of us make a video, vote for the news, create a blog, while the remainder either comment on it, or digest it as they always did. As Marc Fawzi recently argued against a naive post I made, even Google operates a hierarchy, since only the producers and taste-makers actually produce any links to anything — again, it’s the 1% that are creating PageRanks, not the 99%. When clever web applications harness the intelligence of their users, they’ll only be effective when the intelligence they’re harnessing is up to the job. Everyone has a right to musical taste, so last.fm will work by including everyone. On the other hand, digg voters are, by-and-large, technology enthusiasts, so they’ll produce a front page appealing to tech fans. Fewer people, but the right interests and enthusiasms to work for large numbers of bystanders.

To cut to the quick, the Long Tail is source of revenue, not an earner of revenue.