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A conversation with David Rose, little magazine veteran and publisher of Lapham’s Quarterly
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Feb. 17, 2009, 6:01 p.m.

How 4chan shows the challenge of monetizing a big online audience

Andy Baio points us to the last page of this Washington Post article on Chris Poole, the founder of 4chan. 4chan is an online forum where many of the Internet’s memes — things like rickrolling and lolcats — are born, and it’s a hugely popular destination online for a certain sort of mostly young, mostly male person.

It is, it must be said, not for everyone. But it gathers a big audience — 5 million unique visitors a month according to WaPo, 1.5 million according to Quantcast, or other totals depending on your source. (To put those numbers in context, 5 million would make it the size of The Boston Globe. The 1.5 million level is around the Detroit Free Press.)

But that last page of the Post article talks about how, despite that huge audience and costs that don’t go much beyond paying for web servers, Poole hasn’t been able to make a dime. In fact, he’s $20,000 in debt and putting those server bills on his credit card every month. In that sense, 4chan is like Facebook, Twitter, and Digg — sites that rely primarily on their users for their content, but which still can’t make money.

The Post story, by Monica Hesse, is quite affecting in its portrayal of Poole’s dilemma — he’s created something millions of people find valuable, and he can’t make any money off of it. But what lessons can we take for news organizations from his experience. I see two:

There’s real value in quality.

Or at least “quality.” 4chan has trouble selling ads because the traffic he gets is not the traffic advertisers want: “The crass content of the site makes it difficult to find advertisers.” You see similar things about places with lower crassness quotients, too. Dan Lyons wrote recently about the difficulty of getting advertisers interested in blogs. While news organizations aren’t yet making a mint through online advertising, they do have the sort of content lots of advertisers want to place a picture of their product next to. And that’s a valuable thing to have.

(Why “quality” in scare quotes? Because I won’t argue that newspapers vs. blogs/etc. is the same equation as quality vs. junk. There’s an enormous amount of quality in blogs — I read much more content from bloggers and other amateurs than I do from professional journalists. And a lot of what news organizations produce every day is awful. But advertisers don’t see it that way. That’s primarily because newspapers are consistent — that is, just about everything they produce meets at least a minimal quality bar. You can’t say that for “blogs” in the abstract — or anything, really, that relies primarily on its users for content.)

We may not ever be able to depend on advertising to pay the bills.

These sites show just how low the financial return per online user can be.

And maybe I’m wrong, but my working assumption is that someone in the Facebook/Digg/etc. crowd is going to figure out out to close that (perceived) quality gap with advertisers and create a comfort level equal to the one advertisers have with traditional news sites. I think that gap is temporary — based on advertisers’ temporary discomfort with the new medium and those who dwell within it.

When that happens, those new sites will have built-in edge after built-in edge: lower cost of content creation; larger scale; better personalization and targeting of ads. That’s why I have a hard time being optimistic about the long-term viability of an online news business based primarily on advertising. And that’s why the hunt for other business models is so critical.

POSTED     Feb. 17, 2009, 6:01 p.m.
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