Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

The Problem With Aggregators, The Good, The Bad And The Ugly...

Posted by Tom Foremski - September 21, 2010

Frédéric Filloux over at "Monday Note" has written a good analysis looking at news aggregators: Aggregators: the good ones vs. the looters

He likes Techmeme, run by Gabe Rivera, which he dubs one of the "good" aggregators. And I agree that Techmeme is one of the good ones.

He doesn't like The Huffington Post:

The recipe is simple and extremely efficient: you take a 2600 words Vanity Fair interview of the financial reporter Michael Lewis on the rotten Greek public finances, you squeeze it down to 360 words (that's down to 14% of the original length), and you have a self-supporting article that perfectly sums up Lewis' point. This fits the internet era's snippet culture: unless you nurture a secret passion for Hellenic bonds, you have no need to click and link from the HuffPo back to the original Vanity Fair story.

...How come a story that cost the original publisher $10,000 or $30,000 to report, edit and produce gets transformed into a mere one-gulp self-sufficient capsule? That's the internet, baby.

(I would put "Business Insider" in the "ugly" aggregator category because of its cynical use of other people's content ...)

There's lots of money in news aggregators, even "good" ones such as Techmeme, which generates enough revenues to employ 6 people.

Mr. Filloux writes that HuffPo generates an estimated $15m a year..."the HuffPo is generating a fifth of the NYTimes per reader, but its cost structure is nothing in comparison of a organization that spends $2m or $3m/year to just cover the war in Afghanistan."

None of the aggregators, good, bad, or ugly, make an investment in the original articles that they profit from. They say they send traffic to the sites but the value of that traffic is very small.

When I left the Financial Times six years ago to become the first journalist to leave a major newspaper to try and make a living as a "blogger" journalist I quickly saw that the traditional media industry could not make the transition to the economics of the new media world without massive disruption.

It was a situation that I termed, "You can't get there from here."

However, I thought that by now we would have figured out a way to finance quality media. But that hasn't happened. The disruption continues and there is no solution in sight. Interesting times.

HuffPo, and all the other aggregators couldn't do what they do without their original sources. Yet the investment of time and money to create the original articles cannot be recovered with the current methods: advertising. ANd the original sources have no lien on the profits made by the aggregators

I have proposed a possible solution, what I call an "adtribution" model where if you quote from, or refer to an original source, then you should carry one or two small text ads from that source. At least that way, the original content gets distribution along with its "original" advertising -- and some money is returned to the original source that can be invested in new content. A virtuous cycle.

But I doubt if even that would generate enough revenues to pay for say, NYTimes coverage of the Afghan war, let alone everything else it does.

So what's the solution? We still don't have one and there isn't a solution in sight.

As Ben Metcalfe, a commentator on "Monday Note" writes, "Welcome to the race to the bottom..."


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