Tuesday, 21 April 2009

Aggretators and the Death of Journalism

You may well have read about the 'death of journalism' recently, the web is a buzz, with, for example this BBC article. Newspapers are complaining that there readers are disappearing to the internet, and there internet content is being 'stolen' by news aggregators. Since one of my companies products is a blog aggregator, i've a special interest in such stories, which as I'll show
are not true. Newspapers are getting quite angry at there loss of revenue. The angry brewing as for example the editor of the wall street journal describes aggregators as 'parasites or tech tapeworms in the intestines of the internet'

There is a whole host of issues to cover in story of Newspaper and the Internet. Lets first tackle the 'death of journalism'. Being a journalist is a wonderful job, you get paid to write your views, you get to market the truth (as you see it) to the populus. If you a foreign correspondant you get paid to travel, a wonder, marred only be the chance of being shot at or kidnapped. In fact the web has led the growth of Journalism, not its death. Many internet only magazine style sites have spung up covering areas which just wouldn't have been covered pre-internet. Meanwhile, the ordinary person has a chance to post there view to anyone who might read them, via blogs. Suddenly there opinons can be heard. In the pre-internet days, i can remember my dad, posting hundreds of letters and opinons pieces off to newspapers and endless being rejected. There no doubt for the todays reader, the state of journalism has never being better.

So the problem isn't the 'death of journalism' the problem is that 'newspapers are an endangered spieces'. This is only partial true, paper is still a reasonable medium for certain functions, and indeed free sheet that the London Metro started out in 1999, during first dot com
boom. Whats notable is the free sheet part. The Internet has an enormous amount of content and most of it is either self funded or funded by advertising. With so much content no one want to pay to read, micropayments never managed to take off, not enough paper would agree to pay a penny to read a page. Free just seems so much cheeper. So when newspaper publish there content on-line they find they just can't be payed to produce it. That the problem they facing, in they current form, while Journalism will continue, newspapers will have to adapt to find new ways to publish and new ways to get paid for producing content.

Next, Aggretators. Aggretators aren't damaging Journalism, they don't steel content, they pick up on the content that writers decide to free syndicate and draw traffic into the newspapers piece. This actually helps the content providers. What annoys the editor of the 'wall street journal' is not that his piece appears in the aggretator, its that all the smaller papers and bloggers items appear in the aggretator as well. And so why should be reader pay to read a Wall Street Journal piece, when theys plenty of free pages, posting much the same news. Thats whats annoying in the old school of papers. Our 'internet tapeworms' are doing a valuable job of promoting the smaller paper, webazines, and the bloggers. All of which is taking money away from the the old lumbering ink media. Rather than complain or ask for laws to help them, old
media need to adapt and using its advantage of money and scale, to produce content and systems that user want, before there advantages disappears.

Aggretators are boone to knowlegde finding, exspecially if you have obscure pet subjects you want to follow. Thats way I started Feed Distiller, its great to be able follow the new about tiny
subarea of physics, e.g. Neutrinos, and put it all in one place, for when you'll in the mood to research it. In fact aggretators like Feed Distiller are still in a very early stage of technology, and very far from perfect. For example when an personnal obitary piece ended up on our Humour page, is wasn't funny. But that to be expected, until computers can read and understand as well or nearly as well as human, aggretators are going to be less than perfect. In fact, until them, aggretators probably going to Niche compared with Social bookmarking, a tool for subjects that don't have too many people bothering to swap links about.

So Long Live Journalism, Long Live the Human Quest for Knowlegde, and Long Live Aggretators: AI might well start there.

Friday, 17 April 2009

Great start up article in time. The modern dot com startup.

Thanks to Krish Sridhar for pointing me to this article in Time about modern internet startups. Its a biopic about another new web company. But the major point is just how cheap starting a internet company is these days, the intrepid entrepreneur in case, John Tayman, took an idea for a website from idea to breakeven profitability on $10,000, despite having to buy in all the programming and design skills, and without even giving up his day jobs. The article also publishes the wonderful term: Ramen profitable:

The term ramen profitable was coined by Paul Graham, a Silicon Valley start-up investor, essayist and muse to LILO (little in, lot out) entrepreneurs. It means that your start-up is self-sustaining and can eke out enough profit to keep you alive on instant noodles while your business gains traction.

Time contrasts this modern ultra light startup, with the pre dot com crash startup, like amazon, those companies, had business plans, and big venture capital funding behind them. The modern ultra light, has personal funding, and build it and see what happens attitude. This changes is large due to the fact that the skills and technologies need to make web businesses are so prevalent these days, that the capitial needed is so much smaller.

So with it so easy to start a company, are we all going to web millionaires. Of course not, the market can only handle so many ideas. There's a pot of advertising revenue (since google has most of the internet market, this roughly equal to googles add revenue), which has to pay for
all the websites that don't sell a product. Anyone great article reveals how that pot is distributed.
Right now you need to be in the top 100,000 on-line sites in order to make money in the thousands of dollars. Since an unpromoted site might have an alexis rank of 20 million. Your need a lot of marketing to get to the profitable region, worse once your in the region it probable that your have to make a lot a new backlinks in just to keep at the current place.

This isn't surprising, economic theory tells us, once the barriers to entry are low, the market rapidly gets full with companies, profit gets driven out, and price of the commodity gets driven down the cost of its production. The article above, puts the average income of those bottom rung bloggers as 13$/hour. Which is just about good enough to kept a blogger interested in working, but is hardly the "little in, lot out" dream mentioned above in time.

The internet itself, and the pot of advertising revenue is still growing, and this should help to
keep those ramen profitable companies (that are probably very useful to there readers, the dross have already be driven out, by the ramen stage), improving and going forward. But as the
internet grows and gets saturated, whats going to keep the never truly successful dreamers doing there bit for noodle money. That;s a good question, that may haunt the internet to come. Myself i think there's plenty of room for ten or more times advertising growth on the internet over the next ten years, probably given by new and innovative technologies and advertising stategies. So for those starting now, if they stick at it, and serve a useful propose, should gain
above average ricks, based on overall future growth.