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Nieman Journalism Lab
Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

The Newsonomics of content arbitrage

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

We’re into a new age of digital news content. Every conceivable kind of company is starting to produce it and find homes for it. Smarter advertising strategies are matching up against the new content. Mix and match exploding content creation with ahead-of-the-curve ad targeting, and you’ve got a new math.

Presto: Content arbitrage. Forget “curators”; an accurate but museum-musty term for judgment. As news sites have branched out, bringing in community bloggers and sites, “hiring” top-end bloggers, we’ve come up with the genteel “curation,” a popular term at this week’s ASNE conference, a hot (well, warming) bed of such forward-reaching ideas.

So if want to move beyond “editors,” with its old-world connotations, to get at a reaching out, an aggregation of more content, what’s the proper word? Well, aggregator is technically correct, but it’s Terminator-like. News people don’t like to think of themselves copying the the first, big aggregators like Yahoo, Google, MSN and Huffington Post. (Each of which, not incidentally, sees great next-stage opportunity in content brokerage and are competitors to news companies in this area going forward.)

So let me suggest a title that fits what is going on, though it will make “editors” uneasy: “Content brokers.” I’m not suggested that anyone change a job title to “content broker,” but rather to recognize that’s a huge role going forward. (And even backwards, for us veteran features editors who understood that buying content from diverse syndicates, wires and freelancers was an essential part of the business.)

Let’s go to the newsonomics of content brokering.

Demand Media, fairly and not, has become the poster child of the content-and-ad arbitrage. It’s both been derided as an amoral, slave-wage content farm and marveled at for its absolute smarts about the value of content, and its creation. Just last week, Demand announced a deal to power a “Travel Tips” section for; earlier it had done a lower-profile deal with, in Atlanta

It’s just one example of news companies starting to get it about content brokering. The principle is simple: Obtain the highest quality content you can (or at least sufficient to what the market of readers and advertisers demand) at the lowest possible cost. Then, make sure you can make a profit over each set of obtained content. We all understand the idea: Buy low, sell high.

Demand will pay, say, $35 for an article of new treatments for spring allergies, knowing how many pageviews its distribution networks can generate and what cost-per-thousand rates it can get. Maybe it makes $100 or $300 on that article. Maybe it makes a lot more. You can do lots more arithmetic here, with thousands of stories, higher-priced ones and even “free” user-gen ones. The principle, though, is the same.

Newspapers understand that principle. For decades, they employed large newsroom staffs, paid them what they had to, sold advertising, at expectable and rising rates, and took in margins of 20-percent-plus. That’s content-and-ad arbitrage, though it moved at glacial speed and seemed more like a constitutional principle than an evolving business, subject to change.

Now, the arbitrage business is moving at warp speed. Consider just a few of many brokerage initiatives:

  • The New York Times is “buying” content from the Chicago News Cooperative to power its local Chicago edition. It will soon do the same with the emerging Bay Citizen in California. The economics are key here: The Times can’t afford to add full-time staffers at $100k a pop; it can afford something less to get its standard of journalism from other sources.
  • Seattle is hosting the battle royale to aggregate local bloggers. The now-online-only Seattle P-I, led by Michelle Nicolosi, has been signing up bloggers for years, and hosts more than 200 of them, who use the P-I’s publishing system. Across town, Bob Payne, communities director of The Seattle Times, is working with 22 hyperlocal sites in the region. That’s a J-Lab-funded project, which the Miami Herald and Charlotte Observer are also trying. All the newspaper sites get more content, as blogs and bloggers get more notice and traffic.
  • Hearst recently signed up Bleacher Report to provide fan-generated sports content for its sites.
  • Demand’s growing list of competitors to provide brokered content to news companies (and others) includes Associated Content, Helium, Seed, and Examiner, although there are signal differences among them. Outside.In and FWIX both offer pointers to local content of interest and have done deals with news websites.
  • Poynter Institute is even putting a finer point of the business of getting cheaper content, hosting a “Stretching Your News Budget with User Content” seminar in May.

Some of this content brokering brings in community-oriented “user-gen.” Some of it brings in useful content in niche areas, like sports, travel, family, religion and much more. Some does both.

Is there a danger in content arbitrage? It’s value-neutral; it’s all in how you do it. Let’s remember that journalism is essentially a manufacturing process, with as much or as little value added as we want.

On a brand- and content-integrity level, it’s all in exercising good judgment — but against a much wider array of choices. On a business level, it’s making sure you are buying low and selling high. Ironically, many news companies are starting to bring in more content — mostly from local bloggers and sites — but few are seeing ad departments monetize it well. That’s buying cheaply, but if you don’t sell it, it’s not really much of a business advance. That should be temporary, if news publishers and editors take content brokering to heart.

Photo by Petra Sell used under a Creative Commons license.

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  • Carson

    I want to know a few things about these writers who accept $35 checks for stories:

    Are they naive journalism students who think the newspapers buying their content will actually employ them someday?

    Are they secretly working for a PR company?

    How many live outside the US?

  • Tom Foremski

    I think curation is a good term although it might need a little time spent defining it.

  • Tish Grier

    so, then, because a newspaper buys content, does that then make the content “journalism” (in the sense that journalism is a professional process?) Does the newspaper then re-process the “content” to make it into journalism, or does that happen simply because the newspaper gives particular content its “seal of approval”?

    There’s a heck of a lot going on here re the politics of content…..

  • Tish Grier

    To Carson’s point: lots of “content” produced at “content” sites like Demand Media, Helium, Associated Content, Seed, etc, is produced right in the U.S. and Canada–some by out-of-work journalists, some by folks who’ve written for academic journals, B2B or professional publications, some of it (although not much) by students, etc. These days, freelance opportunities are drying up, thus making content production outlets appear to be the only way in which someone might finally get published.

    It’s a big shift–and may end up discouraging a lot of very talented people from pursuing writing careers because they simply will not be able to make a living from writing (that is, without typing their fingers to nubs.)

  • Colin Mathews

    Not all of the content that is published in a newspaper (or newspaper-like media) is “journalism” or even “news.” One problem with diagnosing the future of news and journalism is how tangled up those ideas are, though.

    News media aggregate a lot of content, report on events driven or generated somewhere else, and also practice some enterprise journalism and news analysis (among other things). All of those activities have different costs and revenue opportunities. I believe that successful news organizations will figure that out rather than trying to do everything as if it were capital-J journalism.

  • ian alexander

    The content that drives a user to a site and the content that keeps a user on a site (and keeps them coming back) are not always the same. These content types (should) have very distinct creation costs and measuring sticks.

    -Ian Alexander

  • Allan

    Is this satire?

    “Then, make sure you can make a profit over each set of obtained content. We all understand the idea: Buy low, sell high.”

    Perhaps if journalists and their editors and publishers had or somehow manage to keep souls and actually care about people, then journalism would have a chance? The “content” that should be discussed and nurtured is that of the media folk’s character, as in the content of their character.

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