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Summary:

The sale of The Huffington Post has some concerned we are entering an age of digital sharecropping, in which writers toil for nothing while landowners get rich. But all the web has really done is accelerate a phenomenon that has long existed in the media game.

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The recent sale of Huffington Post to AOL for $315 million has focused a lot of attention on the economics of online media. Many seem concerned that the sale of Arianna Huffington’s creation — along with other recent developments, such as the $1.5-billion initial public offering of “content farm” Demand Media — means we have entered into a new age of digital sharecropping, in which writers toil for virtually nothing, while landowners, such as Ms. Huffington, get rich by aggregating that content and selling it to the highest bidder. But is that really such a new thing? All the web has really done (as it has with so many other things) is accelerate and amplify a phenomenon that has long existed in the media game.

The conventional wisdom about The Huffington Post is that the site makes all of its money from unpaid content, and is therefore benefiting from the work of others — and should compensate them, as Dan Gillmor argued not long after the sale. Nate Silver, of the excellent data-analysis blog FiveThirtyEight, took a look at whether or not this is the case in a recent post, however, and while the data he used is hardly conclusive, it suggests that the site makes more money from the content it pays for — either the content Huffington Post’s own salaried employees write or content from other publications that paid editors aggregate and summarize. (These other publications either ask for or allow this, as a Huffington Post staffer noted, in order to promote their content.)

No One Has to Write for Nothing — But Plenty Do

And what about the rest of the content that isn’t paid for? As Anna Tarkov said recently, no one — least of all Arianna Huffington — is forcing anyone to write for nothing, just as no one is forcing any of the contributors to Demand Media or Associated Content to write for pennies. In the case of The Huffington Post, the site pays reporters to write (and aggregate or summarize) news, but much of the commentary that appears in the form of blog posts is free because the people writing it are happy to trade their content for some non-monetary compensation. Either they get an ego boost from it, or they get to build their reputation or their “brand” somehow. Or, maybe they just like to write.

This bargain doesn’t work for everyone, of course, nor should it. Barry Ritholtz, a well-known financial writer who runs a site called The Big Picture, says in a recent post that he has given up these kinds of arrangements with sites such as Seeking Alpha, TheStreet.com and Business Insider. The alleged benefits that such publishers dangle before writers, he says — including increased traffic to the writer’s website, building a brand and enhancing reputation — don’t really come to pass in most cases.

Obviously, that kind of trade doesn’t work all the time. Some writers may get nothing from that kind of arrangement. But Arianna Huffington didn’t invent this model, nor did Seeking Alpha or any other blog network. Newspapers have managed to build a significant part of their business on top of unpaid freelancers — specifically, the ones who write for the op-ed pages, which are fundamentally identical to the core of The Huffington Post. None of that content, which drives a lot of traffic and comments and other valuable forms of engagement, is paid for. Writers do it because they have an idea they want to pitch, or (in too many cases) because they are self-important and like to hear themselves talk. In other words, the same reasons people write blogs.

There Will Always Be Aggregators

All of these writers find ways of monetizing what they do — they get paid for other related services, or they write books or get paid to speak/consult and so on. Even Ritholtz admits that he himself runs a content feature called Think Tank that uses unpaid writers. He argues that his service doesn’t generate as much content as The Huffington Post and is therefore more valuable, and he also notes that he uses writers who don’t need the money, in many cases because they have other paying gigs. That’s exactly who provided a large proportion of The Huffington Post’s unpaid content as well: politicians, business people, stars and semi-celebrities, none of whom really need the money.

In some ways, the AOL-HuffPo merger blends two very different ways of approaching content: AOL’s model, particularly with Seed.com and the assembly-line approach of the AOL Way, is to pay people tiny sums of money for what they produce, and hope to make it up on volume and SEO. The Huffington Post has been largely based on aggregation and becoming a blog platform for those who just can’t be bothered to run their own blog — or who want the free marketing that being part of the HuffPo can bring.

The funny thing about online content, as former eHow owner Josh Hannah noted in contrasting Demand Media’s paid content-farm model with that of free sites like WikiHow, is that you often get better quality content when people write for nothing than you do when you pay them tiny sums of money, as Demand does. In other words, some people are more than willing to write for the recognition and reputation value and sheer passion (or other intangibles) rather than for money. And there will always be media entities like The Huffington Post that take advantage of that. That’s just the way content works.

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  1. I am coming to the conclusion that the industry’s economics are based on the arbitrage between the ego of the average writer (who believes that by writing for free they can “build a brand”) and the the differential between revenue and what the “Strategic Investor” will pay at exit.

    1. Those are certainly some key building blocks in any kind of online-content monetization model, Alan :-) Thanks for the comment.

  2. Hundreds of millions of jobs have migrated to China because it is effectively one giant sweatshop. The only way we can create jobs that will compete is to price them at sweatshop prices. The upside is that those who work in content sweatshops will have more comfortable working conditions, including access to fresh coffee or maybe working in their underwear.

    1. Yes, that’s a good point, Ken — working in one’s pyjamas is an intangible benefit that I probably should have listed :-)

  3. Again people cry foul when there’s money in the air, but writers willingly submitted their material. The dealmaker always creates the opportunity.

  4. This article is a perfect example of why after 5K article per day the best an outfit like Demand Media can do is call itself a “content” farm–not a single hit on its hands. Not one piece that people can generally say went viral. How many words does this article contain? I can freely summarize it in three: “Talk is Cheap”. The contributors are no more “writers” than “extras” in the background of a movie are actors. In the case of HuffPo, the dynamic of it being a left-of-center site for lefty’s to share their anti-capitalist views was missed entirely. Why else is Arianna being labeled a sellout? If the intent of these people is to write for recognition and reputation, then I should know at least one of them by name, shouldn’t I?

    1. It’s possible that you’re not in the types of circles where people know online writers by name. Or maybe you haven’t read enough online writing yourself? I know many people by name who only write (or blog, if you prefer) online and of course many of them are not paid in their day jobs to be writers.

      Second of all, of course it’s unlikely that someone is going to gain the type of notoriety blogging for free on HuffPo (or their own sites) than they would blogging for the New York Times. Unlikely, but not impossible. Because while these bloggers may not become household names, what’s important these days is not to be a household name, but to be well-known in your NICHE. Many bloggers/writers are nobodies in the traditional sense, but rock stars in their professional circles or areas of expertise.

      1. If a contributor is a “rock star” in their niche, then why doesn’t an article like this mention them by name? Name one niche rock star in your next reply. David Sarokin? Virginia Debolt? Also, why doesn’t this article distinguish between sites which have output goals and those which do not? Demand Media, AOL, Associated Content, and Mahalo have output goals. As far as I know, the HuffPo bloggers did not.

  5. Seth Finkelstein Tuesday, February 15, 2011

    Matt, there are very few things which are entirely new – and that applies most especially to con-men, exploitation, taking advantage of human weakness, and so on. And article starting out that it’s not a new thing for big businesses to give a raw deal to writers – as some sort of apologism – is something of a bitter joke (as in, roughly, the net didn’t invent moneybags ripping off writers, it’s an age-old tradition, so why fuss about it …)

    However, this is not a law of nature. The column I’m proudest about is one I wrote regarding the Writer’s Strike, see

    http://www.guardian.co.uk/technology/2008/jan/03/internet.digitalvideo

  6. I am not one to defend Demand Media, they are often greedy and abusive toward their community, but I have benefited from eHow. And I don’t think we get paid poorly. It isn’t a sweat shop. I have earned on average $20 an hour for my writing and I did it in the morning in my PJ’s over a cup of coffee. Hardly sweatshop work. I could pay my mortgage, my utilities, and my entertainment budget with just eHow earnings if I didn’t also have a regular salary. I’ll be the first to admit that some of my writing isn’t exactly viral material. However, many of my articles are actually in the field in which I have my PhD and teach at a University. That’s how I started there actually. I wrote an article that I wanted to give my students in place of a lecture. The other articles appear to make money because they help people find the information they are looking for and get to it quickly. When I have simple questions (like how to get rid of mosquitos or fix a software problem) I often read an eHow article first to see if it will do the trick. It most often does. There is abuse for sure, and the “contributing writer” articles fall into that category more often than the “member” articles now called “user articles” in my experience.

  7. This Week in Review: Paying up with Apple and Google, Twitter and activism, free labor for HuffPo » Nieman Journalism Lab » Pushing to the Future of Journalism Friday, February 18, 2011

    [...] have eminently legitimate non-monetary reasons for writing there; GigaOM’s Mathew Ingram pointed out that The Times’ op-ed system isn’t much different from HuffPo’s; and Jeff Jarvis [...]

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