Curated by: Luigi Canali De Rossi

Wednesday, October 27, 2004

The Blogs' Long Tail: Blogs And RSS Profit Potential

This excellent report from Morgan Stanley's analysts Mary Meeker, Brian Pitz and Brian Fitzgerald is an absolute must-read for anyone involved with building or maintaining a profitable and forward-looking online publishing business.

The three research analysts at MS have done an abolsutely excellent job at understanding, evaluating, questioning, synthesizing and anticipating much of what is to come around the world of online publishing.

They look closely at the world of blogs, RSS and syndication and they also confront themselves with more experienced news experts at Stanley Morgan to identify possible parallels between past trends and future possibilities.

Here are some extremely interesting excerpts from this report:

"The mainstreaming of Web syndication technology such as RSS through easy-to-use and popular services such as My Yahoo! could create a new business model / revenue stream for companies such as Yahoo!, as well as independent freelance Web journalists / content providers.

We believe that blogs represent the traditionally hard-tomonetize tail of content, and the barriers to monetization are slowly being overcome."

In the following excerpts the ideas of newsmastering, digital lifestyle aggregators and profitability of these new media are all confirmed and supported:

"Remember, with publishing being so easy, it will be very important to be able to separate the wheat from the chaff.

Advertising, itself, may be a competitive advantage, in the end.

Sponsored links have been so successful in part because they do improve the search experience, as they often make it easier for searchers to find what they are looking for.

So too, could sponsored links related to syndicated feeds potentially improve the user experience.

For example, if one develops a personalized syndication reader (such as My Yahoo!) focused on, say, indie rock, the Red Sox, atercolors,
cyberlaw, and Internet stocks, sponsored links could offer new CDs, ticket services, sales on paints, new books, and investment services.

These ads are relevant and perhaps, even more exploitable than the average search, as those interests are something that would be constantly piqued.

In our opinion, a company with significant syndicated readership volume could push for better-syndicated feeds (read full-content feeds) in exchange for a portion of the advertising revenue it helps generate. In this way, a content provider such as Yahoo! may overcome any latent hesitation by an independent Web site to give up control of its content. Instead of users clicking on sponsored Google AdSense or Overture ads on the blog itself, they may click on them on My Yahoo!, with revenue going to both Yahoo! and the publisher.

We believe that increased readership, as supported by user feedback and reviews, could balance the difference in percentage share.

We believe this is the promise of RSS or future syndication technology, and many publishers (especially bloggers) would welcome more exposure to the mainstream."

Also included some long due wise comments about problems and legal issues that may face us ahead, including an exact match to my yesterday suggestion about having the Creative Commons simplify and facilitate this news aggregation work in many ways.

"Other difficulties may be legal ones. While RSS is an open medium, publishers who wanted to close off part of their content via copyright law could slow what should be a technical process akin to Google News

In the worst case, negotiating thousands of copyright agreements in the absence of a more open general agreement could be a weighty proposition for a content aggregator; this could result in a system that favors links rather than a more useful reading system.

Grass roots cyberlaw movements such as the Creative Commons or the Free Software Foundation may provide structure for independent content providers to produce streaming/syndicated content without giving up one's true intellectual property rights."

Finally, the simple and clear analogy to traditional news pay-out model and the vision of a possible parallel in the online world makes for a lot of good food for thought. Read here:

"We see many similarities between this emerging model and historical precedent, as we understand it, with the help of Morgan Stanley Publishing analysts Doug Arthur and Lisa Monaco.

Consider how the Associated Press, Reuters, or freelance journalists work. The Associated Press pays reporters a salary or a per article stipend. The Associated Press then receives revenue in the form of a per-article amount or packaged subscription from eachpaper that syndicates the article. On the other hand, freelance journalists often retain copyright to their work and receive some amount for each paper that publishes the article.

In our model, Yahoo! potentially serves as an "agnostic" Associated Press, collecting freelance pieces from the Web, and distributes a portion of revenue generated by advertising in each one of its syndicated papers, meaning each of those personal syndicated feeds that users set up."

Download the full PDF report (21 pages) here.

All content excerpted from the report is © 2004 Morgan Stanley



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posted by Robin Good on Wednesday, October 27 2004, updated on Tuesday, May 5 2015

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