January 28, 2006

Is it a value chain or an attempt to buy community?

by skrenta at 12:43 PM

Mike Arrington asks "Is [paying users for contributed content] a gimick to generate attention or is it a viable long term strategy to generate user adoption?"

Sometimes when a web model takes off the economics flip 180 degrees. Instead of sites that want content paying to get it, content producers pay sites with traffic for distrubition. Steve Case in the early days of AOL famously told a group of content producers that, in the future, they'd be paying him to be on AOL instead of him paying for content. They laughed but Steve's prediction came true.

We saw this economic flip happen in the web directory space. In 1998 portals like Lycos and AltaVista were paying to have a web directory on their front page. Directories cost $1-2 per URL to create. Lycos licensed Looksmart's directory, this was how Looksmart made money. When we started giving the Open Directory data away for free at Netscape, portals that had been paying for a directory before ditched Looksmart and started putting up the ODP. But -- surprise -- Looksmart found that they could actually afford to pay sites to host their directory. Looksmart charged webmasters to be included in the directory, then paid high-traffic sites for distribution. And the whole economics of the directory space flipped around.

Raw Sugar could very well end up with something like this with their federated directory building model. That would be cool. The web needs a new model to build organized, tagged directory collections, and it's time for a new one to come along. Raw Sugar could be onto something here.

On the other hand, paying individual contributors piecemeal or through lotteries or contests for content creation often seems like an act of desperation at social software companies that aren't seeing takeoff.

Someone on the board says why don't you pay everyone a dollar a post and that will prime the pump. But the motivation of working for a buck compared to participating for fun or just out of sheer interest in some web playground or social space or a straighten-things-up game are so different, that even if you successfully prime the pump, your selection method bred for the wrong sort of user base -- folks that want to get paid instead of participating because they just like participating. Once the freely-motivated subgroup that you hoped to attract catches a whiff of the off-smell of paid bait content, they stay away.

It also demeans the contribution. If I'm going to post about local city politics, or write a review of Friday's dinner out, it's borderline offensive to suggest that I'll only do so if I get a dollar. On one hand, professionals who do these things for a living get paid a lot more. But nonprofessionals aren't producing this content for the money at all. They talk politics because they want to have a local effect, or review a restaurant to warn people away after getting bad service. Not to earn a cup of coffee. It feels sorta like the street hustlers who squeegee your windshield and then ask for money, in reverse. Eww. I don't want to squeegee the web for pocket change.

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