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RSS and Business Models: Everyone Is Talking…

By - August 09, 2004

moneyA lot of talk lately about how to make money off RSS. And well there should be, it’s more than half of most popular blogs’ traffic, and so far it’s avoided any pat approach to monetization. Scoble discusses the topic again over at his site, and points to a meme that I’ve been kicking around with a few folks, including Andrew over at Six Apart and some others. Scoble:

So, there’s the condundrum. How do we serve the “users” and the “branders” at the same time?

Simple: we need a new advertising model. Content providers should have a way to get paid for linking to things. Actually, Amazon.com is showing the way here. Its associates program is paying webloggers back for linking to Amazon. That’s an effective way to make money (note: I do not use affiliate programs on my blog — if I link to something I am not getting paid for doing so).

The problem is that there’s a large amount of money chasing a limited amount of content. So, there’s pressure on both the professionals to put ads on pages and force users to come to a Web page where an advertisement can be served, as well as on amateurs who need to find ways to pay their bills and get a little bit of cash out of the blogging hobby.

Who will win? Well, here’s the rub: users today have so many choices about where to get their content that they have a chance this time around.

The users are readers, the branders are advertisers and publishers (including some bloggers) who want you to come to their site instead of read full text in their RSS feeds. I think the affiliate model is interesting, and worthy of paying attention to. (Ross has posited a related “Cost Per Influence” but I don’t really understand it yet, though we promised to talk about it as soon as we can…) But we still need good ol’ fashioned ads in our RSS feeds if we are going to tap the market which is already in place to support content.

Earlier I pointed to RSSAds, but I’ve not heard anything new on this. And I know some companies, like Kanoodle or Industry Brains, are starting to support inserting ads into RSS feeds, but this can get irritating if not done with the reader in mind. And because most of these types of solutions are networks, sites can’t be bought individually, which breaks my endemic model.

In the end, I sense that readers will be fine with ads and RSs comingling. Jarvis has done some work on this, but we’re not there yet. Also, It’s interesting how the design, branding, and control which publishers are so used to having is lost through RSS, and it’s no wonder they refuse to allow anything more than headlines and excerpts out into the world. With RSS, at least in this early stage, it’s all about the voice. I rather like that. Kind of like radio before TV.

Over at Boing Boing, we’re thinking through this issue. I’d be interested in developments or further thoughts in this space, if anyone knows of any.


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7 thoughts on “RSS and Business Models: Everyone Is Talking…

  1. Rafat says:

    Well, I’ve been using ads in my RSS feed for a few months now…i started last year, then did it for a while and then stopped it. Now I have some tracking mechanism in place, so I started again a couple of months.
    I put one ad (text or graphic) a day in the middle of the main content, which goes into the RSS feed…I have seen CTRs on ads rise by about 50 percent since I started this…and haven’t heard anything negative from anyone (though that doesn’t mean that some people are not happy..I’m sure some are)
    I have anecdotal evidence on one VC in this space who clicked on an ad for a startup and then visited the company for a possible investment in it…this furthers your point about endemic advertising in some categories…
    I do think most of such ad efforts have to be done the hard way…getting advertisers in the gate, rather than the self-serve or contextual model…
    More sometime later…

  2. Bill Flitter says:

    We released a case study a few months ago on ads in content feeds. You can find it here => http://www.pheedo.info/archives/cat_case_study.html

  3. Dick Costolo says:

    There are a bunch of interesting things to think about here. I think the issue with the “content providers should have a way to get paid for linking to things” is as follows: readers will very quickly want the content provider to distinguish between those links that are paid for and those links that are included as a matter of course. Now, once you’ve got an article in which “links that are paid for” are called out in some notable way, well, that starts to sound an awful lot like a regular text advertisement to me. Next, as you say, ads in feeds get irritating for the reader if not done right. It’s annoying to hop into an aggregator, see that a feed has been updated with new items, only to find that these items are just rotated ads. This “breaks” the user experience. I believe Rafat solves this by simply running his ad through the feed as a content item that stays there and ages with the rest of the feed. There are a host of other issues related to the fact that the publisher has no control over layout in a feed, even if you assume you’re always working in plain text. In the web world, I may have some very personal content intermixed with my PVR expertise (apologies to Matt Haughey), with Google’s AdSense over to the side. This doesn’t necessarily trouble the reader. If in the display of the feed, however, the pvr ads abut the very personal content, this can prove annoying to publisher, advertiser and reader alike. I’ve gone on too long for a comment already, so I’ll stop there, but lots more to consider.

  4. Matt McAlister says:

    There seems to be a viable model serving the entire content in a feed along with some graphical advertising. For example, a few weeks ago, I changed the news feed on The Industry Standard to include full text with a 160×600 ad unit embedded in the content (inspired by Steve Gillmor). Though I’ve had some minor glitches due to my technical limitations and the creative is all house ads, the results are pretty encouraging. Not one user has told me they prefer to receive less content or that they dislike the ad placement. Subscribe rates continue to climb at the same rate. And, best of all, the click-through rate on the 160×600 ad unit for the first 9 days in August was 0.51%.

    Clearly, this example is an old business model applied to a different medium, and monetizing web page views will never be the same as monetizing RSS content. And I agree with John that a huge opportunity lies in valuing links. But this model could jump start some growth, and it might encourage publishers to push more content via RSS rather than less.

  5. umair says:

    Cool discussion. My possibly worthless 2c – from an economic pov, ads in rss are a contradiction. The point of rss is to kill transaction costs users pay (ads) to read your content. So the danger is (long-term) that ads in rss become the same kind of invasive arms race they’ve become/became in html. This would devalue the whole standard.

    Since rss creates significant value, the most ‘rational’ thing to do is charge users for it, and recapture some of the extra value they gain. Obviously, this is going to be less than cool for people who want to join the rss revolution – it kills their upside of using rss and getting more exposure.

    I think what will happen (going way way out on a creaking limb) are newish forms of advertising that create marginal value for readers. The Post experimented recently with ‘paid discussions’ along these lines. Do you think it would be cooler to read what Rafat had to say about a sponsored topic than see a pic from the same advertiser? I sure do.

  6. Fraser Dinnis says:

    In traditional media, the advertisers essentially control the content. Programmes such as ‘Friends’ are created for a particular demographic and magazines are developed around an advertising need. The web is no exception here with content developers at best having no control over advertising as they tend to outsource the placement of ads to third parties.

    For RSS to be different, how about a completely new approach where prospective advertising is held in a ‘marketplace’ for writers of blogs to select. Given we subscribe only to blogs that are of interest to us, surely we should allow the writers to select any ads? That way, there is more chance of the ads being relevant to our interests.

    Payment can be done is a similar way as today. Each ad will carry its own ‘price’ and participation in the marketplace will require the weblog to carry approved tracking software.

    Whilst I am a critic of the CPM method, the reality is that it is best not to change too many things too quickly.

  7. For ease of uptake and to influence content creation as little as possible, how about the creation of a link valuation auction that works out of sight and out of mind of the content creator?

    It might go something like this. Create an intermediary company, called, say, LinkCredits (the 5-minute name used only for simplicity), that has a proprietary linking methodology, something like tinyurl.com does. The link tracks the source of the traffic and the destination of the traffic. In the signup process for linking through with LinkCredits, the content site that is the source of the traffic has already defined its audience, its topics, etc. LinkCredits only routes and tracks the traffic from the content creator to the link destination site. It doesn’t interrupt the traffic and should remain as seamless as possible.

    When the traffic starts to come through, LinkCredits recognizes the site it’s headed to and either has a relationship with that site or does not. If a relationship exists, then LinkCredits alerts the site of the profile and volume of the traffic that has started. The site is prompted to login to LinkCredits and pay for the traffic. A number of creative things can be done to help them decide to pay for the traffic, but I think that smart webmasters/e-businesses will recognize the value of the traffic and pay for it. They also will learn about the characteristics of the traffic from the content site’s profile (more business rules TBD here but you get the idea).

    If a relationship with the site being linked to does not exist, then LinkCredits notifies the site that traffic is being sent to them. LinkCredits also informs the site of the value of the traffic, the profile of the audience and some statistics on why they should sign up to receive more targeted traffic in the future.

    From the cost per visitor charged to sites being linked to a rev share or cost per click gets credited to the content creator from LinkCredits. Content creators can choose to see who is paying for their traffic or not. (My concerns here is that if content creators know who pays it will influence their content.)