Andy Hagans lays down some phat posts about blogging network business models. In Sorry, Rev Share Still Blows Andy states that the lack of risk to blog network owners also leads to less opportunity.

It’s About Incentives: The Economics of Blog Pay Structures Andy talks about overcoming the spam issues typically reinforced by most blog payment terms:

Depending upon the risk aversion of a particular writer the figures can change, but essentially the best payment structure is something like:

• 80% fixed salary
• 20% discretionary bonus contingent upon writing quality
• Weekly posting quotas
• 4x Penalty structure

The point is to provide sufficient stability in payment rates such that you can attract professional writers, but still maintain a sufficient motivation for quality in the form of a bonus. And finally, to tackle the problem of posting regularity include a penalty clause which is a multiple of the per post rate.

Pretty sharp stuff Andy. Few people actually post about the realities of pay scale and how to pay people to run blog networks. Clearly in giving out this information Andy is trying to reinforce his position as a blog overlord.

Since few people see the first posts on a new blog it is no big deal if they are a bit crappy, right?

I sorta thought that a bit, but I think that much less after working with a friend to start up a network. I wanted to start up a network of around 30 channels covering various topics. I thought so long as we eventually got to quality the start would not matter much, but some of the posts made me feel a bit like some of the writers were stealing money from my bank account.

Not to say that any of the writers are bad people though. If I were paid a flat rate for my work and was not being paid enough to be fully committed to the project I would slack off and write quick posts recapping any press release I could find on the topic.

When you break it down to that far of a level there is no value add, the equivalent can be automated via software, and you have nothing but a channel of noise and ads.

Starting around 30 channels at once means that you are not learning from the first few channels and applying it to the others right from the go. It is easy to take on too much to where you can get a bit overwhelmed with it all.

It may also be worth doing a large number of example posts on each channel. I told my friend that between he and I we could write the stuff ourselves, make about 15 posts a day across the network, and by the end of two weeks we would have enough of a archive history to be able to start marketing the sites. If you let others write the content and they do a less than stellar job it becomes much harder to market.

Bringing on others to do work is probably going to be important if you want to scale out some sort of a mini web based publishing house, but when quantity gets too far ahead of quality it may be hard to untread some of those steps.

Nick Denton announced he is killing OddJack:

So we’re closing down Oddjack by the end of the month. We’d rather concentrate our energies on sites such as Deadspin, which have buzz and a growing audience, and new launches, which have equal potential. The moral of the story: it’s easy to launch sites; much harder to make them popular.

Being the smart ass that he is, Nick asked Jason when they would be closing their dead blogs. Jason responded:

Why close them? They can sit there and get traffic, make Adsense revenue, and serve as a resource for folks. I think the model is to leave these sites up… I don’t see the point in taking them down.

The two big tips there:

• Archives have zero incremental cost. When blogs get past the break even point each additional day is more logarithmic profit growth (due to more content, more linkage data, and search engines trusting the sites more).
• New channels are cheap. A new blog can be launched for $20. If you already have a solid well known blog you can use that market position to market the new site at virtually no cost (other than time).
• Quality channels are a bunch of work. In spite of a ton of market research data you can’t be certain how successful a blog will be. In some markets it may make sense to make the least spammy channel, but if you are in a competitive field where there are other authors passionate about the topic it is much harder to build an audience large enough to monetize unless you put a ton of work into the blog.

Want to be a blog network mogul? A while ago I teased Andy Hagans calling him a blog overlord. He recently wrote on the subject.

Another day passes, and Knight Ridder, a major newspaper company explores being sold.

I think there are five large problems newspapers are facing:

• inefficient ad sales (and online is only getting more efficient, with eBay offering up past transaction information and Google’s free web analytics product)
• increasing number of channels (TV, magazines, web, blogs, etc) and shifting of attention online, and new ways to consume information (TiVo, deals to rent shows on demand, and Google may even go into renting books). Online you can even get a rough estimate of channel demand before you create a channel.
• having to cover boring channels – online one can chose to only cover channels that are highly profitable directly via ad sales or indirectly via linkage data and attention
• lower publishing costs, easier profitability, and larger distribution for individuals – now anyone can compete with you, without there being a significant barrier to entry (other than possibly the time needed to grab the market’s attention and have leading information systems trust it). With online ad sales getting more efficient quality micro niche sites become more profitable. The lack of borders makes some poor niche topics profitable when combined with the ease of search. It is also easy to publish a number of channels in parallel.
• lack of topical interest or bias – sure media formats and publishing methods have some biases built in, but by being an individual you can get away with putting a lot more bias into what you do and focus your efforts on only what interests you. People are attracted to a bias they can trust.

I am not sure that I am smart enough to know the answer to the problems the newspapers are facing, other than strong online integration and reader becomes the editor or writer, but there can only be a few major players in any marketplace.

What other values can papers add that make them worth paying more for (either as a consumer or advertiser)?

The biggest reason I ask these questions is that a friend of mine has been giving me shit about not creating a network of sorts. My four fundamental problems with creating a network of sorts are:

• The value I can add to the topic.
• What I am doing now works well enough to get me by, and there is at least a small fear of change.
• I have some issues with authority, and it might be weird for me to be a boss.
• Ultimately demand and popularity follows attention.
• Long term profitability and permanence.

Breaking them down one by one…
Value I can add to a topic:

• I can get a channel decent exposure rather quickly and how to help stories spread.
• I have a good idea on how to chose channels that will be profitable.
• I know people in many markets. For example, so far I have partnered on one content site, and had a friend who buys ads on the site.
• I can provide a good bit of capital off the start, and could pay people above average rates to write.
• Although I have not done much in the lines of ad optimization, from chatting with friends and viewing sites I know a great deal about the topic.

One of my biggest problems with this concept is that I typically view the work of others as a big amazing combination of things, while minimizing my own work into the bits and pieces that it is.

Fear of Change:
To be honest I think I sorta was hella lucky with my market timing, and still have only created one hyper successful website. I also like that I am not stuck worrying about margins and money and business this or that everyday.

In spite of my work being profitable and decently linked, I still do not get much feedback on most of my posts. I am uncertain if that is due to my writing style, site format, or just me being me.

Authority Issues:
Not sure how to deal with that… 😉

Ultimately demand and popularity follows attention:
As information systems evolve this will only become more and more true. I struggle daily with debating what is useful information to put in my ebook and when teaching more is giving too much and overwhelming people.

The point being with that last statement is that as information systems evolve that ranking number 1 may end up meaning you need to be number 1 from end to end.

Sure there is room for a variety of voices on any topic, but as topics get more competitive will hired writers who are writing about a topic because they are getting paid to write be able to outperform those who love their topics. If not, will I be able to add enough value to the equation to where my network is still profitable. If you knowingly put inferior content at the top of the search results is it wrong? I have done it in the past when I needed to to get by, but I find it a bit harder now. And then at that point where does one draw the line with what they are willing to do for a dollar.

Profitability:
And even with that there are some issues because some less than honest business models are far more profitable than their honest counterparts. Just look at the AdSense ads for SEO. Most of the site submission ones are open fraud. Although Google knows they support all sorts of fraud they don’t want to be forced to define where the limits are.

Feedback:
I have yet to get much feedback on this site, but if you run a network of sites what made you decide to start it, how did you know it was the right time, is this post out to lunch, etc etc etc.

SEO = typically not linkworthy / linkable by mainstream credible sources
search = very linkable

Sometimes by changing how you cover a topic it becomes far easier to become a credible source. That may mean:

• being the first guy with the news
• waiting to see what others have to say
• changing the topic to be broader or more focused
• trying to grab news from less traditional sources

To tell the truth, I like reading and learning a bunch. Had I realized how hard it would be to get people to want to link at a site focused on SEO which also sold an SEO information product I probably would have rather picked a broader topic or chose other topics to write and learn about. That is a large part of the reason this site exists.

I have gave many people crap for creating blog networks. I don’t think owning a network is bad, I usually think that the owners do not offer enough to get their share. A recent interview of a friend helped clear up the point a bit for me though:

It irks me that people feel their own countrymen “deserve” jobs anymore than their counterparts 13 timezones over. I am looking for the best person for the job, and the buck stops there. Frankly, all the whining and complaining Americans do makes me less likely to want to hire them!

In reference to pay rates: I do believe I pay a fair wage. Of course, when outsourcing, the point is to save money on wages. One of the things my partners and I routinely look at are average wage figures and purchasing power parity stats for whatever countries we outsource to — we want to make sure we’re paying well above average wages. Firstly, this helps you sleep better at night. More than that, though, better pay helps you get higher quality people.

Actually it’s more than just researching wages — we have to remember to give the Diwali bonus, for instance, rather than the standard Christmas bonus 🙂

Just because you hire others does not mean that you are taking advantage of them, and if you help teach people how to make more profit with their time there should be no guilt or shame in that.

When you look at the competition in any field you only have to compete with the top channels. Sure that sounds stupid, but if all the top results for your field are from more diverse sites and there are not many people covering your topic specifically it may mean the field is open for the taking. If hundreds or thousands of people already cover your topic but are usually overshadowed by broader sources then it might be time to look at if the site should be part of a network or if it needs to be broadened or changed in focus.

Nick’s linkbaiting post is very good on a post by post basis, but you also don’t want to constrain yourself to a topic. If you find yourself posting off topic too often that might be time to create another channel or site.

Having said all that, I think many times people mess up because they stay stuck on a topic or do not look at how to make news / stories / ideas / topics / tools more linkable / sharable. I have only dabbled in the market, but intend to try out a few more ideas down the road.

So the person who writes the Weblogs channel for About.com recently created a blog network which she is mashing up with B5 media.

Whenever there is a new launch of any sorts it is bound to take some criticism from competitors and onlookers, but this is a way for mutual gain by leveraging authority and distribution. The fact that New York Times owns About.com also grants more authority to those blogging there.

I think some people forget how new the web medium is. Beyond how new it is as a whole it has only recently got easy enough for just about anyone to be able to profit from it. Combine that with

• the social nature of blogs
• the tracking and feedback tools that come along with them
• the ease of link acquisition with running a well read channel
• search engines like Google getting smarter at looking at unnatural linkage paterns
• search engines like Google tuning up the duplicant content filters to the point that it kills off the business model of many empty shell affiliate feed and product database type sites
• the ability to leverage Google’s advertising base & other contextual programs like Chitika

and it starts to make a bit more sense why everyone and their dog is quickly trying to put themself atop some sort of channel driven network.

You don’t have to be a good salesman if you can get an audience. All you need is the audience and the targeting is moreless automated.

Recently NickW launched Performancing, which will surely be a stellar site about how to make money from blogs. This post by Andy really highlights how much profit potential there is on the web.

I spent most of today screwing with information architecture of a clients empty shell merchant site, knowing eventually it will lose marketshare and profitability to someone who makes their site social / a cause. I would much rather be out linkbaiting somewhere.

A few years back MicroSoft used to use LookSmart to power their search database. This meant that LookSmart listed sites would be listed near the top of the MSN search results. Simply write yourself a good relevant title, submit to LookSmart, and pay per click for all the MSN traffic you can eat.

But, there was an even better way for this then nearly bankrupt kid to get MSN traffic. For free. LookSmart used Zeal as a backup directory to feed noncommercial content into the LookSmart database. It also allowed you to list pages instead of sites.

For any topic you wanted to collect feedback about you could:

• do a bit of research
• write a page
• edit your way into the search results for hyper competitve single word queries

I was a fairly depressed person for a number of years (and still sometimes act like a jerk or screw myself over without reason). My behavior got me interested in depression and anti depressant drugs.

I created pages about most of the major anti depressant drugs and then people started emailing me with comments thanking me for the small bits of information I had on that site. I then started getting so much email that it was overwhelming, so I decided to allow people to leave feedback via a blog, and I created Depression Blog, which is essentially a forum without deeply specific thread titles. Each thread is “name of drug” feedback.

The benefit of a blog over a forum are:

• does not require a login
• you can customize the fields to make it hard for automated bots to spam
• since most people do not think of it as a forum they are more likely to state exactly what they want to in a single informative post
• after a few people post the rest will likely follow suit with their style

For the longest time I did not put ads on the site because I wanted to keep it pure. Recently I put ads on it, and it looks like the site will probably generate around $500 a month.

I am collecting feedback about a topic that is typically heavily marketed to be pro drug manufacturer, and the feedback shows it is not always rosey. Many of the side effects people mentioned were similar to ones I noticed from when I used to dabble in hard core drugs. Some of those side effects are not listed on the lables.

All in all, that site:

• gives depressed people an outlet where they can express themselves
• lets them realize not everything is their fault, showing them that others are dealing with the same things
• see they are not alone in their struggles, and that the drugs effect different people in a wide range of ways

Add to the above that

• the site is almost entirely self generating
• it creates a nearly livable income with minimal effort or maintenance
• that profit can also be used to help buy further distribution for the site

Now MSN no longer uses LookSmart, but MSN search is still easy to manipulate and there are other networks that provide free and fast feedback loops which can be used to help generate self generating sites and business models.

Some people may argue that my creating of Depression Blog is me profiting off of the suffering of others and that the site is dishonest. I say it gives them an outlet and collects information that probably would have never been collected. It may also help people learn to look deeper within to solve some of their problems (and I still need to do a bit of that too).

Automated sites can have a social conscience, and are far better for the web than the cut and paste news story blog business model is.

Off the start they can take a bit of time to set up, but many of those types of sites can run on autopilot after about a month or two. If you create 20 sites generating $20 a day you are making 6 figures a year without the hassle of having a boss or customers.

The initial vision of the web was a version that allowed anyone to edit it. An open form box where people can express themselves about a topic relevant to their life and mind helps collect a broad base of human experience that may have never otherwise been gathered.

John Battelle announced he is testing ads for his new Federated Media publishing network on SearchBlog. John already has a number of heavy hitting influencers joining his network, including Om Malik, MetaFilter, & Boing Boing.

What makes Federated Media different than most blog networks is that John believes the ads and content should be kept separate. I am not trying to say that others are doing a bunch of advertorials, but John wants to gather a group of the best technology bloggers to sell influencer ad space. Unlike other blogging networks I believe he is partnering with the bloggers to sell their ads, instead of trying to own the blogging websites and hire the writers.

You can run into scalability problems during economic downturns if you hire hundreds of writers and create the associated corporate infrastructure.

John was a co-founder of WIRED & founded The Industry Standard. He was recently profiled in ClickZ & IWantMedia. No too long ago my friend Philipp interviewed him as well. If you can’t get enough John Battelle in your diet you may also want to see the guest lecture he recently gave at Berkeley 🙂