Among those questions are the following: Are people going to pay directly for content? Is native advertising going to subsidize media? Does sponsored content raise ethical issues for media companies? Are individual creators going to succeed by connecting directly with their audiences or by striking deals with existing media entities? And as far as I can tell, the answer to all of these questions is the same: Yes. And no. That may not seem very helpful, but I think it is.

You have to try everything

At one point during the panel on monetization — which also included Richard Tofel from ProPublica, Raju Narisetti from News Corp. and Bob Bowman from Major League Baseball — Atlantic Media president Justin Smith said that his organization didn’t really have a single answer to the question of how to monetize content, because it was more or less trying everything it possibly could (which is one of the reasons why I have said Atlantic is one of the media companies worth watching).

(L to R:) Richard Tofel, President, ProPublica; Justin Smith, President, Atlantic; Raju Narisetti,SVP and Deputy Head of Strategy, News Corp; Bob Bowman President and CEO, MLB Advanced Media paidContent Live 2013 Albert Chau / itsmebert.com

For the Atlantic, that means experimenting with sponsored content (despite its potential pitfalls, which were highlighted during the Scientology incident) as well as doing live events, and introducing a premium offering — which Smith wouldn’t provide much detail about but is supposedly coming soon. As he put it:

“To say that the ad model is going to win over the pay model is foolish. I think the solution will be multiple revenue streams, it will be how experimental, how creative you are in seeking out those revenue streams… we must try everything. And we must not believe that one thing is going to work over the other until we actually experience it and see it over a period of time.”

The future isn’t going to be one model

Even just on that panel, we had almost every model represented, with ProPublica — which is built on a donation model, one that Dick Tofel believes will be replicated in dozens of states and cities, in the same way most metropolitan areas have symphonies or ballet troupes — and the Atlantic, and then News Corp. with its variety of hard and soft paywalls, and MLB with its app-based and content-focused strategy. Bowman said everyone should have some form of pay model, because why not give your hardcore fans a way to pay you for what they value?

(L to R:) Andrew Sullivan, Editor, The Dish; Andrew Ross Sorkin, Columnist, NYT; Maria Popova, Writer, Brain Pickings; Tim Ferriss, Author, The 4-Hour Workweek paidContent Live 2013 Albert Chau / itsmebert.com

The “blogging superstar” panel also had a variety of models, none of which was obviously better than the other. Maria Popova of Brain Pickings said that she didn’t even think of herself as a business — she wrote “for an audience of one” and was happy to get whatever donations she could get. Andrew Sullivan has famously bet his future on a direct-to-reader model, but he also said he isn’t opposed to advertising either (although he is adamantly opposed to native advertising). And Andrew Ross Sorkin says he is happy to continue building a personal empire of sorts within the New York Times.

Maybe that in itself is enough of a valuable insight, at least for now: that the future of media isn’t going to be one thing, or even a couple of obvious things — there is no one-size-fits-all solution (if there ever was) and waiting around for one to appear is a mug’s game. At least for the foreseeable future, the landscape of digital media is going to be a form of loosely organized chaos, with everyone trying whatever they can. As Clay Shirky said about newspapers two years ago, this chaotic environment is actually beneficial, because we need to try everything in order to figure out what works.

Note: You can find streaming videos of each of the major sessions at paidContent Live in this post, and links to transcripts of those sessions in this post, as well as a roundup of our live-blogging of the event.

Post and thumbnail photos courtesy of Flickr / Mark Strozier and Albert Chau

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• Content monetization: News licensing and syndication still need marketplaces and infrastructure
• Putting Big Data to Work: Opportunities for Enterprises
• Frenemy mine: The pros and cons of social partnerships for online media companies

Thanks to those who helped make paidContent Live a success, and thanks for your interest in our speakers.

• 65 percent of Buzzfeed’s traffic now comes from mobile devices
• How the public is reshaping media at Reddit, Vox and LinkedIn
• Content personalization still has a long way to go
• One-third of the Guardian’s readers are American, with US traffic growing 37% last year
• Tumblr CEO David Karp says at least 70 users have turned blogging into book deals
• The definitive answer of web or apps as the future of mobile content? It depends.
• The Atlantic is going to launch a paid content offering soon
• Can brands evolve from digital advertisers to mass communicators?
• Why digital book publishers are starting to embrace data
• Native advertising: winners, losers and a lot of hype
• A lesson from the blogging elite: there are many ways to the top
• Aereo CEO says free content might be on the way

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• Connected world: the consumer technology revolution
• Author to Audience: Disintermediation in Publishing
• Frenemy mine: The pros and cons of social partnerships for online media companies

That’s one of the ideas contained in a new book from Nicco Mele, a lecturer at the Harvard Kennedy School who acted as operations director for Howard Dean during his 2004 presidential race. In the book, entitled “The End of Big: How the Internet Makes David the New Goliath,” the author looks at how the social web and digital technology in general have altered the balance of power between the individual and the organization. And in a recent piece at the Nieman Journalism Lab, Mele argues the same thing is happening to the media:

“Some news personalities now play a strong role on Twitter and Facebook, but they often get little institutional support for this, and such participation and engagement remain merely part of a narrow web traffic strategy. But what if news outlets decided to flip their model, so that the editorial staff was not subservient to the brand, but the ‘brand’ became a platform for talent?”

Embrace the trend or be disrupted by it

Although Mele doesn’t explicitly say so in his Nieman piece, the flipping of this model is already occurring, whether media outlets want it to or not — as I tried to point out in a recent post about the shifting balance of power. Where platforms like the New York Times and Newsweek used to hold all the cards, and individual writers were forced to cut deals in order to find an audience, bloggers like Andrew Sullivan and Josh Marshall of Talking Points Memo have shown there is an alternate route (one we’ll be discussing with Sullivan and others at the paidContent Live conference on April 17).

While Sullivan’s experiment as a standalone media entity is far from complete, he has raised over $600,000 to fund his team, which means he is well on his way to being self-sustaining, instead of just being a part of the content at The Daily Beast and subject to their broad paywall. And a big part of what Sullivan (and pioneers in other fields, such as musician Amanda Palmer) see as the benefit of this approach isn’t just the money, but the personal connection with an audience.

As Mele suggests in his piece at the Nieman Lab, many traditional media organizations not only don’t help their journalists make use of social tools to connect with their readers, they actively discourage it with restrictive social-media policies. But what if they tried to enhance that connection and build on it — and perhaps even tried to share in the monetization of it? They could even experiment with allowing readers to subscribe to individual writers. Says Mele:

“On Election Day 2012, more than 20 percent of NYTimes.com traffic visited Nate Silver’s blog. At the same time, his book had just been released. The Times had little role in Silver’s book. But imagine it had a big one; imagine the way it would open revenue possibilities, taking advantage of the giant platform the Times provided Silver. Publishing books, hosting events, and public speaking are just the beginning.”

Why not a personal paywall for writers?

This is the essence of the “personal paywall” that I tried to describe in a recent post: the idea that individual writers are what increasing numbers of readers are connecting with and seeking out — not impersonal media brands or institutions. Why not provide Nate Silver or Nick Kristof with as many tools and resources as possible to make that easier? The New York Times is clearly thinking along those lines, according to new executive editor Jill Abramson, but it would be nice to see that idea expand and accelerate beyond just a chosen few at one newspaper.

Instead of thinking of the newspaper as the pre-eminent brand, why not think of it more like a talent agency or a record label: an entity that gets its value from helping to develop and promote a variety of voices — in whatever way it can, across whatever platforms. Newspapers have always promoted their star writers, but any value captured has gone solely to the larger brand, the assumption being that those journalists should consider themselves lucky to have been chosen. But as Mele notes:

“Talented people — their voices, personalities, tastes and ultimately news skills and judgement — are the filters that digital era consumers want, not archaic, anonymous news brand names. With the decline of trust and loyalty in large institutions, it is increasingly hard to imagine people in the coming decades subscribing because of loyalty to an institutional Big Media entity. Yet it’s easy to imagine them wanting to fund several people whom they trust to bring them information they care about.”

Post and thumbnail photos courtesy of Flickr user Christian Scholz, as well as Shutterstock / olyy and Shutterstock / Daniilantiq

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• Building a better paywall: strategies for monetizing news content
• NewNet Q1: Content Farms and Niche Networks on the Rise
• What the New York Times Can Learn From Rupert Murdoch’s Paywall

Ferriss will be taking part in a panel looking at how some individual writers and media creators have become independent media entities in their own right, and have been able to carve out a healthy living for themselves outside of the traditional industry channels set up by the book, magazine or newspaper industries — and what the benefits and disadvantages of that approach are.

Unlike some of our panelists, Ferriss has always been an independent operator: he first appeared on the scene in 2007 with his book “The 4-Hour Workweek,” and then quickly followed that with other books applying the same approach to health and cooking. Ferriss has built his following on social media into a powerful publicity engine, and is also showing other authors some potential routes for success: according to Ferriss, BitTorrent — normally thought of as a source of pirated content — drove more clicks to Amazon than any traditional ad has.

Sullivan, Ross Sorkin and Maria Popova

Blogger Andrew Sullivan, who is also on our paidContent panel, is another poster boy for the independent media movement: Sullivan recently embarked on a closely-watched experiment by quitting the Daily Beast to launch his own standalone site, funded entirely by his readers. For Sullivan, this move is a return to his past in a sense — he was an independent blogger early in his career and tried the self-funding route before joining The New Republic, followed by The Atlantic and then the Beast.

Also on the panel is Andrew Ross Sorkin, a New York Times writer who also appears regularly on CNBC and other outlets, and has created a booming enterprise for himself within the NYT by building his DealBook blog into a multi-faceted entity with a conference and other elements. Hopefully Sorkin will tell us whether he has thought about taking the same route as Andrew Sullivan and becoming truly independent, and why he has so far decided not to do that.

And rounding out our panel is blogger/curator extraordinaire Maria Popova, who has built her blog Brain Pickings into a destination for hundreds of thousands of loyal readers, who help support her both through donations and by clicking on affiliate links to Amazon when she mentions a book. Although this approach caused some controversy recently, Popova has been able to make a living solely from blogging, without any help from traditional media channels.

Is this kind of approach viable for anyone, or are Sullivan and Ferriss and Popova exceptions? Are there benefits to remaining inside a traditional entity like the New York Times, the way Sorkin has, that outweigh the benefits of being independent? And will more writers and other creators choose to stay independent or become so in the future, thanks to the social web and platforms like Kickstarter? Those are some of the questions we hope to ask at paidContent Live. Please join us.

This post was revised on April 8 to clarify that Tim Ferriss has not self-published his books. Post and thumbnail images courtesy of Flickr user seanosh

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In his post on the official Google blog, entitled “A reminder about selling links that pass PageRank,” the Google staffer notes that the company has repeatedly warned about the dangers of links — including those on advertorial pages — that are designed to pass some of the hosting site’s PageRank (in other words, its status in Google’s search index) to the company paying for the links:

“Please be wary if someone approaches you and wants to pay you for links or “advertorial” pages on your site that pass PageRank. Selling links (or entire advertorial pages with embedded links) that pass PageRank violates our quality guidelines, and Google does take action on such violations.”

Sites that host such content can be penalized

The penalties for doing this, Cutts says, including “losing trust in Google’s search results,” as well as a reduction of the site’s PageRank status, and lower rankings for the site in Google’s search results. The proper way to avoid this kind of penalty is to use what’s called a “nofollow” tag at the end of the URL for a paid link, which tells Google not to assign any PageRank to the page on the other side of that link.

According to Search Engine Land, the Google post may have been triggered in part by the behavior of a number of British local newspaper sites such as the The Worcester Standard and This Is Dorset, which were hosting advertorial content from an online flower-delivery service called Interflora. Even though the posts clearly say “ad features” and “advertisement,” the links to the company’s website and other related links don’t have the nofollow tag attached.

David Naylor, a consultant who specializes in search-engine optimization or SEO, described in a post of his own how the Interflora content had broken the rules, and how the company’s own PageRank had declined sharply as a result — and he also noted that the PageRank of the local news websites that posted the content hadn’t just declined, but had actually dropped to zero. According to Naylor, such a massive drop for a single infraction is unusual.

Sponsored content is growing in popularity

The Atlantic has been in the news recently for its experiments with sponsored content, including a large feature on the Church of Scientology that was widely criticized. The magazine later apologized for the piece and said it was amending its rules on sponsored content, but it’s not clear whether those rules include adding “nofollow” tags (the Scientology piece has been removed). A survey of some of the Atlantic’s recent sponsored content showed no links at all.

BuzzFeed is also known for its sponsored-content program — in fact, the site carries no traditional advertising whatsoever. The use of this kind of advertorial sparked a critical post from blogger Andrew Sullivan at his Daily Dish site, in which he suggested that blurring the line between editorial and advertising the way BuzzFeed does is unethical and disturbing (Note: We’ll be discussing alternative monetization methods with Justin Smith of the Atlantic, Jon Steinberg of BuzzFeed and Andrew Sullivan, among others, at paidContent Live in April).

All Google really seems to care about, however, are the links in this kind of content: in one of the sponsored posts that Sullivan criticized, about the launch of Sony’s PlayStation 4 console, a link to a contest Sony is running did not have a nofollow tag attached, but — like the Atlantic — many of the other sponsored posts we looked at on the BuzzFeed site contained no links at all.

In a post on Twitter, BuzzFeed founder Jonah Peretti said that all of the paid content that appears on the site goes through Google’s DART system (which is part of its Doubleclick advertising unit) and therefore doesn’t pass PageRank.

Post and thumbnail images courtesy of Shutterstock / Brian A Jackson and David Naylor

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• Frenemy mine: The pros and cons of social partnerships for online media companies
• Social fourth-quarter 2012 analysis
• Yahoo, AOL and Microsoft’s premium ad exchange just might work

Today, we launched phase one of our new responsive site design, and the changes we’re introducing to paidContent and GigaOM will ensure that doesn’t happen to you here. At a time when readers are using so many different devices, one big challenge for digital publishers is retaining the quality and consistency of the reading experience not only across devices but also across different operating systems and browsers.

Now, whether you’re on a desktop or a laptop, a tablet or a smartphone, our sites will automatically adjust, rendering the content in the way that best fits that particular environment. We know, for example, that it’s harder to hit a target on the page with your finger than with a mouse, and so if you’re reading us on a tablet, we’ve enlarged the target to make it easier to strike. Similarly, rather than try to cram our entire site onto a 4-inch smartphone display, we’ve removed some content from the mobile view so as to focus the presentation of the most essential information. In all cases, the site simply readjusts to fit the real estate on the screen that you’re on at the time.

Below, you can see how the presentation of an actual story changes as the screen shrinks.

Those aren’t the only improvements that we’ve made. Among the other things you’ll notice about paidContent and GigaOM:

• More curation: If you’re time-stretched, our new “Must Reads” section tells you what you absolutely shouldn’t miss.
• Easier sharing: We’ve made it easier to share not only whole stories and also pieces of content within stories.
• Better performance: Because the pages are lighter weight, they will load faster.
• Crisper display: We’ve added blur-resistant icons and new text-size controls, so there’s no more squinting to read text or straining to hit a small target when navigating the site.
• A cleaner look: We’ve ditched a lot of widgets that had simply built up over the years but no longer serve their original purpose.

For phase one of the redesign, we’ve intentionally simplified the look and feel of the site — it’s more akin to updating the plumbing in a house than redoing the facade. But without reliable plumbing, a house isn’t very habitable. These upgrades pave the way for subsequent phases of this redesign over the next few months that will include more changes in how we present our content.

Finally, I wanted to thank the fantastic team that has been slaving away on the redesign for last several months: our head of product management Raza Zaidi; engineers Casey Bisson, Matt Batchelder, Zach Tirrell and Jamie Poitra; designers Stephen Engert, Arlo Jamrog and Jonathan Koshi; and our product guys Adam Kazwell and Ian Kennedy. They’ve worked long hours — and tested countless iterations in QA — and we think the results are great.

We’d love to know what you think. If you have suggestions or comments (positive or negative), please leave them in the comment thread in this post.

Thanks again for being loyal readers.

Images courtesy of PlaceIt by Breezi.

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• How to deliver the next-generation web experience
• The Future of TV Can Bet on “Apps Everywhere”
• Mobile 2012 and beyond

Today, we launched phase one of our new responsive site design, and the changes we’re introducing to GigaOM and paidContent will ensure that doesn’t happen to you here. At a time when readers are using so many different devices, one big challenge for digital publishers is retaining the quality and consistency of the reading experience not only across devices but also across different operating systems and browsers.

Now, whether you’re on a desktop or a laptop, a tablet or a smartphone, our sites will automatically adjust, rendering the content in the way that best fits that particular environment. We know, for example, that it’s harder to hit a target on the page with your finger than with a mouse, and so if you’re reading us on a tablet, we’ve enlarged the target to make it easier to strike. Similarly, rather than try to cram our entire site onto a 4-inch smartphone display, we’ve removed some content from the mobile view so as to focus the presentation of the most essential information. In all cases, the site simply readjusts to fit the real estate on the screen that you’re on at the time.

Below, you can see how the presentation of an actual story changes as the screen shrinks.

Those aren’t the only improvements that we’ve made. Among the other things you’ll notice about GigaOM and paidContent:

• More curation: If you’re time-stretched, our new “Must Reads” section tells you what you absolutely shouldn’t miss.
• Easier sharing: We’ve made it easier to share not only whole stories and also pieces of content within stories.
• Better performance: Because the pages are lighter weight, they will load faster.
• Crisper display: We’ve added blur-resistant icons and new text-size controls, so there’s no more squinting to read text or straining to hit a small target when navigating the site.
• A cleaner look: We’ve ditched a lot of widgets that had simply built up over the years but no longer serve their original purpose.

For phase one of the redesign, we’ve intentionally simplified the look and feel of the site — it’s more akin to updating the plumbing in a house than redoing the facade. But without reliable plumbing, a house isn’t very habitable. These upgrades pave the way for subsequent phases of this redesign over the next few months that will include more changes in how we present our content.

Finally, I wanted to thank the fantastic team that has been slaving away on the redesign for last several months: our head of product management Raza Zaidi; engineers Casey Bisson, Matt Batchelder, Zach Tirrell and Jamie Poitra; designers Stephen Engert, Arlo Jamrog and Jonathan Koshi; and our product guys Adam Kazwell and Ian Kennedy. They’ve worked long hours — and tested countless iterations in QA — and we think the results are great.

We’d love to know what you think. If you have suggestions or comments (positive or negative), please leave them in the comment thread in this post.

Thanks again for being loyal readers.

Images courtesy of PlaceIt by Breezi.

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And I couldn’t walk away from the opportunity to be part of growing something new and vibrant. We were covering the economics of digital media while we were living it.

This summer, we celebrated paidContent’s tenth birthday. The topics we cover are as relevant today as they were then, and, as the evolution of digital media continues, it’s even more important to look beyond the endless launches and the shiny toys to what works, what doesn’t and how to do it better.

Thousands of posts, countless all nighters, numerous events ranging from our first mixer in Santa Monica to paidContent 2012, one funding round, two sales, and lots of great colleagues later, it’s time for me to take on new challenges.

It’s been a privilege to be part of paidContent and ContentNext Media, to work with Guardian News and Media, and then to help find a new home with GigaOM. So many people have helped along the way that I’m afraid to start with names for fear of leaving someone out — thank you all.

When we migrated to the GigaOM Network, I promised we would continue to bring you the same news coverage, smart reporting and insightful analysis of the rapidly evolving economics of digital content. My leaving won’t change that. Building something that doesn’t work without you is a hollow accomplishment. Instead, we built a team at paidContent that individually and collectively lives up to those goals every day — enhanced by the deep bench of journalists at GigaOM and everyone else who makes the journalism possible. Together they should be unstoppable.

As for me, this new phase starts now with my first chance in a very long time to take a deep breath. What’s next? Stay tuned.

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• Will cloud computing push the BRIC market to the front?
• Despite growth in open source, commercial solutions still dominate
• When Does Data Become Complex?

“There are a lot of existing siloed publications, like Aviation Weekly and cruise industry magazines,” Ali says. “There are frequent-flyer blogs and things like that. But there’s nothing in the travel industry that brings it all together in a cohesive, information-led effort. We are in a good position to build that.” His cofounder is Jason Clampet, formerly the senior online editor at Frommers.

Ali founded paidContent in 2002, sold the company to its pre-GigaOM owner, the Guardian Media Group, in 2008. He left paidContent in 2010.

Ali describes Skift as “a new breed of media company” that appeals both to industry professionals and consumers. ( The closest parallel, he says, is Politico, which targets Washington insiders as well as a large base of consumers interested in politics.

At launch, Skift is focused on news for the travel industry, with revenues coming from advertising. It contains four types of content: Software-aggregated, human-curated, licensed (from sources like the AP and Reuters) and original reporting. “That’s the fastest way to scale,” Ali says. The site includes categories like “Insights,” with news on mergers, acquisitions and travel startups, and “Rooms,” with info on hotels, rentals and shares.

As it expands, Skift will add news content for business travelers and will launch subscription-based data, services and other tools. “We feel the way to build a brand is through the media part, and the way to build a business is through the data,” Ali says. “We hope to scale on revenues with data, not with ads.” SkiftData, for example, will collect publicly available travel data like local tourism statistics and airport departures and arrivals. “All of that data is publicly available, sitting in government depositories and mostly in Excel or Word files,” Ali says. “We’ll be pulling all that data, normalizing, cleaning it and publishing it in a user-friendly fashion.”

Ali funded the site himself until its launch and has now raised a $500,000 angel round from investors like former MySpace president Jason Hirschhorn, former Thomson Reuters president of media Chris Ahearn, former Wall Street Journal publisher Gordon Crovitz and Associated Content founder Luke Beatty.

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• Content monetization: News licensing and syndication still need marketplaces and infrastructure
• Digital won’t “evaporate” ad dollars

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

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