17 August 2009

Economics of content on the web

I only follow this topic in a casual way, but I found this article to be interesting, especially given the challenges being faced by the traditional news organization. Quoting the article:
The vast majority of the value gets captured by aggregators linking and scraping rather than by the news organizations that get linked and scraped. We did a study of traffic on several sites that aggregate purely a menu of news stories. In all cases, there was at least twice as much traffic on the home page as there were clicks going to the stories that were on it. In other words, a very large share of the people who were visiting the site were merely browsing to read headlines rather than using the aggregation page to decide what they wanted to read in detail. Obviously, this has major ramifications for content creators’ ability to grow ad revenue, as the main benefit of added traffic is the potential for higher CPMs.

So, as always, the big question is how you get the incentives right so that people can be compensated for creating valuable content?

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