Wednesday, December 21, 2005

Who's in charge dot com? - sure isn't the publishers.

The the balancing act going on between the forces I list below is very interesting, and will grow more important as the internet consolidates it's position as the key publishing and communications tool of the times - perhaps of all time.

Users of the internet look for info and click on ads. These guys pay everybody's bills and should be demanding better treatment. Google makes something like 95% of it's money from ... you!

Publishers provide the content and also help make Google and other big company insiders rich in exchange for modest revenue shares to the publisher (probably about 50% for Yahoo Publisher Network and Google Adsense, though neither Google nor Yahoo share this revenue sharing data with the publisher). Over time the rev share should tend to increase as it did with Hotels, which rapidly went from early days at 20% to the current 50% and up on the room commission.

Big companies must maintain profits AND market share, which may compete with each other. e.g. For Adsense and YPN higher payouts mean lower profit but a greater market share of publishers. Loyalty on the internet is a fickle thing - most people are willing to jump from a previous favorite as soon as the strong prospect of greater profit beckons.

Little companies who must promise big profits to investors. Take Squidoo for example - they are trying to minimize the cost of publishing. Will the "experts" cooperate and if YES, how much revenue will they demand? The balance is extremely important to publishers. If Squidoo can get publishing on the cheap from the legions of well qualified yet bored and "ready to write" internet users, most "quality" online publishers may be hard pressed to match that content with even poorly paid writers.

Higher quality, extra interesting publishers may be able to maintain an audience and tap into the type of thing John Battelle is working on with his Federated Media project - a high yield advertising system that matches users/advertisers/publishers in new and better ways.

JoeDuck's Blog


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