In the wake of the AOL merger, Nate Silver wonders how much money the Huffington Post makes off its unpaid serfs bloggers:
The Huffington Post receives huge amounts of traffic: about 15.6 million page views per weekday, according to Quantcast. But it also has a huge amount of content accounting for those page views. It publishes roughly 100 original pieces per day paid and unpaid in its politics section alone. And politics coverage, according to Arianna Huffington, reflects only about 15 percent of the site’s traffic. How many page views, then, does an individual blog post receive? And roughly what is it worth to The Huffington Post?
His rough calculations:
[T]he average blog post which we estimate generated a couple thousand page views was worth about $13 in advertising revenue. The median blog post, with several hundred views, was worth only $3 or $4. Even Mr. Reich’s strongly-performing post was worth only about $170, by our estimates.
I wrote my Sunday Times column on this on Sunday, which is paywalled. Money quote:
As the advertising online market has taken off, the first attempt to really, really exploit it has begun. Here's the philosophy outlined in a memo last year from AOL's chief Tim Armstrong. Editors were to select stories (mostly borrowed from other outlets or generated by unpaid serf-bloggers) based on the following priorities: traffic potential, revenue potential, edit quality and turn-around time. Notice the priorities.
Now, obviously, newspapers have always been commercial and want to sell stories. But what's new about the web is that every page view adds potential revenue and there is no limit to potential pageviews. The temptation to run a website devoted almost entirely to hysterical claims about Obama's betrayals of the left and shirtless pictures of Hugh Jackman striding out of Australian surf becomes rather huge. Addictive even. But huge is the point. HuffPo's business model is sheer size. If you can throw as much content - free, borrowed or merely linked to - in one, sprawling place, you will generate a big enough crowd of eyeballs - 40 million of them a month at last count - to bring bigger and bigger advertisers to sign on.
Ka-ching! For me, the most telling part is that of the $315 million, Arianna and her investors only took $15 million in AOL stock. More an act of cashing out than digging in. But, hey, it's a model and it's working. And no-one is forced to write for free. If you can make a fortune off people's vanity and desire to express themselves, why not?
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