Newspapers and magazines are going through a tough time. Not because of the recession, but because they don’t seem to know what to do with the Internet and the rise of free content. Some are choosing to try and sell their content. Other are trying to find ways to entice more advertisers into their different media channels. Some are even finding small successes with these approaches. But most just don’t have a clue how to be successful in this new era.

Recently, Rupert Murdoch announced that his flagship papers around the world would start charging for online content. The resounding response of most people under 40 was, “Well, let’s see how that works for him, then.” It will end in tears. Murdoch’s bully methods may have been perfect for the era that is ending, but are not going to work in the new economy.

A story caught my eye in a recent Economist magazine that adds yet another nail into the old media coffin. Using concept of social media and crowdsourcing, a clever piece of software helps journalists to reduce the cost per hour of generating content. It’s very clever.

You can read about it here, or an extract below.

Emperors and beggars: The rise of content farms

Can technology help make online content pay?
Apr 29th 2010 | From The Economist print edition

THIS week the Wall Street Journal, the pride of News Corporation’s stable of newspapers, launched a 12-page daily section of local news in New York, in a direct challenge to the New York Times. The premise behind the launch is that expensive, thorough reporting will pay for itself by attracting readers and advertisers. Indeed, Rupert Murdoch, News Corp’s boss, recently proclaimed, “Content is not just king, it is the emperor of all things electronic.” However, a new brand of media firms dubbed “content farms” takes the opposite view: that online, at any rate, revenue from advertising or subscriptions will never cover the costs of conventional journalism, so journalism will have to change.

Newspaper articles are expensive to produce but usually cost nothing to read online and do not command high advertising rates, since there is almost unlimited inventory. Mr Murdoch’s answer is to charge for online content: another of his newspapers, the Times of London, will start to do so this summer (the Journal already does). Content farms like Demand Media and Associated Content, in contrast, aim to produce content at a price so low that even meagre advertising revenue can support it.

Demand Media’s approach is a “combination of science and art”, in the words of Steven Kydd, who is in charge of the firm’s content production. Clever software works out what internet users are interested in and how much advertising revenue a given topic can pull in. The results are sent to an army of 7,000 freelancers, each of whom must have a college degree, writing experience and a speciality. They artfully pen articles or produce video clips to fit headlines such as “How do I paint ceramic mugs?” and “Why am I so tired in winter?”

Although an article may pay as little as $5, writers make on average $20-25 an hour, says Mr Kydd. The articles are copy-edited and checked for plagiarism. For the most part, they are published on the firm’s 72 websites, including eHow, answerbag and travels.com. But videos are also uploaded onto YouTube, where the firm is by far the biggest contributor. Some articles end up on the websites of more conventional media, including USAToday, which runs travel tips produced by Demand Media. In March, Demand Media churned out 150,000 pieces of content in this way. The company is expected to go public later this year, if it is not acquired by a big web portal, such as Yahoo!, first.

AOL, a web portal which was recently spun off from Time Warner, a media giant, does not like to be compared to such an operation. Tim Armstrong, its boss, intends to turn it into “the largest producer of quality online content”. The firm already runs more than 80 websites covering topics from gadgets (Engadget.com) and music (Spinner.com) to fashion (Stylelist.com) and local news (Patch.com).

In AOL’s journalistic universe there are three groups of contributors. The first two are salaried journalists and freelancers with expertise in a certain domain, who currently number more than 3,000. Then there are amateurs who contribute to individual projects, for instance when AOL recently compiled profiles of all 2,000 bands at the SXSW music festival in Texas. (Contributors were paid $50 for each profile.) All this is powered by a system like Demand Media’s that uses data and algorithms to predict what sorts of stories will appeal most to readers, what advertisers are willing to pay for them and what freelancers should therefore be offered. So far, however, the numbers are small: in the week of April 25th, 61 writers published 155 articles in this way on 33 AOL sites.

Predictably, many commentators are appalled. Demand Media has been called “demonic”. But, argues Dan Gillmor, a professor of journalism at Arizona State University, “the firm is at least interested in what people want to know—which is nothing to sneer at”. And unlike many other services that take advantage of “user generated content”, he says, Demand Media actually pays its contributors.

The problem with content farms, Mr Gillmor and others say, is that they swamp the internet with mediocre content. To earn a decent living, freelancers have to work at a breakneck pace, which has an obvious impact on quality. Moreover, content that is designed to appear high up in the results produced by search engines could lose its audience if the search engines change their rules.

In AOL’s case, the question is whether the infrastructure for the three tiers of contributors will work financially, not just journalistically and technically. Clay Shirky, a new-media expert at New York University, suggests that content produced cheaply by freelancers could serve to fund more ambitious projects. If AOL can make that work, the pundits will cheer.

Source: The Economist