E-Commerce Newsletter A-Clue.Com, Volume 4 Number 26
A-Clue.Com
by Dana Blankenhorn
Volume IV, No. XXVI
For the Week of June 26, 2000

This Week's Clue: Profiting from Content

This Week's Clue: Profiting from Content

SSP (Shameless Self Promotion)

The Dirty Truth About Venture Capitalists 

New TLDs No Panacea

Creative Destruction

Clued-in, Clueless

The failure of APBNews and the problems at Salon move me to repeat and expand on a theme I've been harping on (usually to deaf ears) since 1995. 

That theme is what's online content, and how do you make money from it?

Here at a-clue.com the business model is fairly simple. I offer a personal perspective as a way to get work from publishers and editors. Instead of marketing through sales calls, in other words, I market by giving away my best work. This works well, and while my current goals (more personal branding, more equity in what I do) are hard to reach, note that other goals (make a living, control the content of what I write) have already been achieved.

Now what if you're trying to publish others' stuff, and make your living that way? What is an online publication anyway? How do you identify and create value? Here you'll be glad to know that the old rules still apply. A publication organizes and advocates a marketplace. Newspapers do this geographically, business publications do it in terms of industries, and consumer magazines do it in terms of lifestyles.

Look at this rule carefully and you'll see why Salon and APBNews never had a chance. Both identified areas of content, but they didn't identify marketplaces or lifestyles. Readers alone are not a marketplace. A marketplace consists of buyers and sellers. Lifestyles feature products and services. 

A publisher's content organizes a market first by identifying the reader. What do they look like? Describe them in 25 words or less. Where do they live, what do they do, how do they live? When you know them you can attract them. Now, what do they need and what do they want? You'll write about that, and you'll seek the best products and services for your readers' needs as advertisers. 

Next, remember one of the big advantages an online site has over paper. You can do the deal. You type the word blender, create a hyperlink for it, and you can offer 50 to your reader. Or you can do a review of some hand blenders and leave readers a few clicks from purchasing any of them. 

Notice that to do this deal you don't need to open a store. You don't have to sell an ad, either. You just need an affiliation agreement with a merchant, in this case QVC, and some worthwhile value-added content. A good publisher will find these editorially valid links and profit from them. It's not just advertising, but commerce in context which makes the difference.

Here's where we get to something new, the key difference between this medium and what's come before. You can use your feedback loop. Discussion in the form of chat, forums, and e-mail is a crucial element in a successful content site. It's not enough to have "names" or "news." You have to empower your readers, get them communicating with one another. That builds traffic, "stickiness," and it builds both advertising and commerce revenues.

While riding my bike with a friend who works at the local Hormel plant, another point occurred to me. It's an old saying from Chicago about the packer who used "everything from the pig but the squeal." Applied to this business, it means you need to exploit every potential revenue stream. You don't just make money from advertising, commerce, or syndication. You need to be turning your writers into stars, maximizing their incomes so they'll stay loyal to you. (In the business press this means running a conference .) It's amazing how many publishers haven't figured this one out, either out of a misplaced disrespect for the journalistic process greed, or laziness. But it's vitally important, and it's the next frontier. 

On the Internet anyone can be a brand. I'm a brand. Can you make my brand more profit than I can on my own? If you can, I'll work for you. If you can't, I won't. And without talent that brings readers back you can't serve them. 

Commerce, feedback, talent, and knowing your audience (market) intimately are the keys to success in the new publishing business. What's most amazing is that, after five years, few people have gotten it right. There is still a huge opportunity for you. 



SSP (Shameless Self-Promotion)

I like your feedback but wouldn't you like to share your knowledge with other clued-in readers, and get their help as well? Now you can. The new discussion forum at a-clue.com is the place to do it. I'll see you there.

I'm still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.

Also, please pass this along to friends and urge them to join our list. And don't forget our new e-mail address .

I write daily for ClickZ, and weekly at Andover.News. I write monthly for  NetMarketing, Boardwatch, and  Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.

Remember that it's journalism that keeps the Clues coming...


Takes on the News

The Dirty Truth About Venture Capitalists

The dirty truth of venture capital is it's a bad way for most companies to get the funding they need.

Why? VCs have a notoriously short time horizon. They're looking for home runs, and don't care for singles or doubles. They figure they need just one hit out of 10 investments, so they're quick to pull the plug. They're more interested in Wall Street than in customers and far more interested in their success than your own.

Angels beat funds every day of the week until you're just about ready to go public. (If you have an existing real-world business, you can be your own angel.) Angels must, before they invest, understand your business and time horizons. They make a bigger commitment, and they usually offer better advice. Just make sure your angels are truly using "mad money." If they're too afraid of losing their stash, they'll be worse for you than VCs.

New TLDs No Panacea

Efforts to create new Top Level Domains won't end hoarding and speculation  unless they're based on new assumptions.

Chief among these new assumptions is that the back-end of the domain name must mean something, and if that back-end is inappropriate for you, then you shouldn't be using it. I remember when .net was for networks and .org was for organizations like the YMCA. Registrars and corporations have gobbled these names up to support .coms, and they'll grab the new ones unless rules are enforced.

A second assumption that must change is the idea that only one outfit can have a name. The Coca-Cola Co. is grabbing the coke and coca-cola names on every TLD, including every geographic TLD. They should have a choice between doing that and supporting their trademarks in one domain, preferably .com. The hoarding by big business is the biggest justification for speculators to keep driving the price of doing business higher for their own profit.

The third assumption is that you can redirect as many addresses as you want to one place. A requirement that each site have one domain name (and only one) would free up millions of names others can use at the $10 price they're really worth.

Don't hold your breath for these new rules to be enacted.

Creative Destruction

We're accustomed to seeing the Internet's growth as constructive. It's also destructive. Newspaper stands and travel agencies are dead, newspapers and newsletters are dying.

What's most amazing is how fast this evolution can occur. When I started my freelance career Rick Inatome was a richer name than Bill Gates. He built the Inacomp computer retailing chain, based in his hometown of Troy, Michigan. When I bought my first Kaypro, he was a big man.

Inatome, 46, is like me a former boy wonder, and now runs a start-up called ZapMe, an education site. But his former business, and his former industry, has gone south. Inacom, now based in Atlanta, went Chapter 11 last week . When was the last time you saw a computer storefront? Fry's survives as a lifestyle store, while the consumer market has gone to the consumer electronics niche, and the business market has gone into office parks to die.

There's a Clue here. Tomorrow is not guaranteed.

Clued-in, Clueless

Clued-in is Pete du Pont . Yes, the very same. He told me once he was editing a "magazine," but he's smarter about identifying and understanding audiences than anyone in Washington, and he deserves the financial reward of that.

Clueless is Microstrategy, for barring reporters from its annual meeting . That kind of idiocy just attracts more reporters. It also destroys your credibility with the market, credibility that's vital to survival .


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