Bill Rempel, a.k.a. NO DooDahs!

I last wrote about Seeking Alpha about a year and a half ago. It might be worth refreshing your memory, including reading the comments after the post. Just about three months ago, John at Controlled Greed quit contributing to Seeking Alpha, and the comments are, again, illuminating.

The genesis of this post? Just last week I got an email from one of the Editors at Seeking Alpha, asking if I were interested in contributing. In reply, I asked what the revenue percentage split would be, for ads served over my content. Answer? Zero. Then I asked the Editor who solicited me if they could provide the clickthru rates, viewership amounts, and eCPM numbers for Seeking Alpha, so that I could evaluate the relative benefits of the increased exposure that contributing would provide; it was at this point that this Editor checked around, saw I was a former contributor who had left, and politely declined to provide the information, and responded that if I should ever reconsider, I should contact them.

Like I’ve said before, playing with aggregators is a business exchange, wherein a contributor submits material in return for increased “exposure” - much of which will probably be identified with the site and not with the author - and with a very small percentage of that “exposure” being clickthru traffic that the author could potentially monetize. The aggregator gets content to sell ads over. That’s not exploitation. That’s business. I’m just explaining the business, primarily for the benefit of those who haven’t looked at it very closely, and may have thus made ill-informed decisions.

I don’t have enough information to be definitive, but I think I can get into the right general ballpark, despite having to make many assumptions, so I’m gonna have a go at it.

Seeking Alpha currently generates in the neighborhood of $210 of revenue from every article that they post, and in the neighborhood of $375,000 per month total. Do the math of 15 million monthly page views, 85 articles per weekday, 21 weekdays a month, and a $25 eCPM ad rate (total for all seven-ish ad units per page served).

We can see the economics of the split without considering the monetization rates.

Just adding more posts from more writers doesn’t necessarily add more “fresh” eyeballs; some portion of the increased page views from additional posts will just be “stickier” customers that might drag down the eCPM. Let’s assume 1 out of every 3 additional views garnered from additional content is a “new” set of eyeballs. Let’s also assume that a new writer with 20 posts a month increases total views by 20 ÷ 1785 = 1.12%, with 1/3rd of those being “new” views. That makes 0.0112 ÷ 3 * 15,000,000 = 56,022 new views every month for Seeking Alpha.

The increased “exposure” a new contributor gets, is that poster’s equal-weighted share of posts, adjusted for the new viewership. Let’s say they get 1.12% of 15,056,022 views, or 168,695 views of their articles a month, which for most writers is a bonanza. How many of those clickthru to visit the author’s homepage, and present an opportunity for the author to monetize them? Consider the fact that articles are presented in their entirety at Seeking Alpha, with the opportunity for comments and discussion at Seeking Alpha, and one can visit all the other (market-related and vetted by SA editors) posts by the author, as well as a short “bio” page for the author, without leaving the confines of Seeking Alpha. Also consider that readers, even “sophisticated readers,” of SA are likely to consider content there to be “Seeking Alpha’s,” and not that of an independent contributor. I would say that a clickthru rate of 0.5% is on the high side. That makes 0.005 * 168,695 = 843 views to the author every month.

So absent considerations of monetization rate, the author who contributes to Seeking Alpha gets 843 new monthly views on their site (which they could potentially monetize), and provides new customers to Seeking Alpha (which Seeking Alpha could potentially monetize) worth about 56,022 new views. That’s 66 to 1! Considering that Seeking Alpha is going to have a lot more clout with advertisers than I will, is it any wonder that I asked for my cut? It’s hard to monetize viewers that don’t visit!

Feel free to plug in whatever assumptions you personally think are reasonable; even if only one of ten viewers of the new author were new to the site, and the author clickthru rate were a full 1% (double my assumption), it would still be a 10 to 1 exchange … and none of my numbers consider the natural failure and replacement rate of the current authors, and the fact that they have to continuously recruit new contributors just to keep the current pace of posting up. For example, they currently list 98 “gold star” contributors, but there’s at least one in there that no longer participates, even though he’s still actively writing about stocks – he just hasn’t asked (yet?) for his older material to be removed. There may be others like that.

This “benefit split,” wherein the contributor gets a great deal on non-monetizable “exposure” but very few monetizable page views, while providing a great many monetizable page views to Seeking Alpha – who can command better monetization rates – is the reason that many would-be, used-to-be, and current contributors have pressed, and continue to press for, an advertising revenue split – which Seeking Alpha won’t provide. What would motivate someone to contribute without any kind of economic split?

(1) There aren’t too many “long tail” bloggers as contributors. I believe that the few “long tail” contributors they have, are motivated by the “make ya famous” phenomenon. Either the idea of hundreds of thousands of readers wets their whistle, or they are gunning for (or dreaming of) a job as a freelance Street writer. Most of the contributors are selling newsletters or financial services.

(2) I venture that many contributors haven’t even examined the mechanics of the aggregating business, and simply figure that it’s increased exposure for them, with little-to-no marginal effort on their part, so it’s gotta be a good thing.

(3) Those newsletter-sellers and money managers who haven’t explicitly looked at the math from both sides are probably just grateful for the incremental increase in traffic they can monetize. 843 extra page views a month can be useful for fund managers soliciting new clients. If these money managers aren’t also established or semi-established bloggers, then a few hundred extra monthly chances to solicit clients may be the difference between a growth rate in assets under management, and a failure to replace clients that leave.

(4) If the newsletter-sellers and money managers have looked at the math, maybe they don’t mind somebody else making more than they make on the deal, as long as they DO make that incremental money on their advertising or newsletter/membership sales. If they’re fishing for big clients, or selling an expensive newsletter, then maybe their eCPM is high enough that it makes the inequitable page view split irrelevant. If their income is “lumpy” from high-price product conversions, they may feel that they need to have their name out there as much as possible, and they see the money that SA makes off of their writing as a “client finder’s fee.”

Where do I fit in? I don’t currently monetize traffic effectively enough (no paid newsletter or asset management services) to make the traffic split seem fair to me, and I’m not so desperate for nickels and pennies that I’m willing to enter a business transaction that generates dollars for the partner, without asking for my cut. I’m not motivated by the “fame” of becoming a paid writer (freelance or salaried), but I enjoy writing and would accept reasonable job offers in that regard – “reasonable” meaning those that paid comparable to other market writers with multiple years of experience. So that leaves me as a non-contributor for now. That might change in the future, but right now I don’t see it.