Yahoo’s Strange Reverse Economics

I tried to write this for the Yahoo! Content Network, which is explained below. But they rejected it (and took a week or so to do so), so most of what you’re reading is illustrative and not accurate. (You’ll see.) The point still holds, so I’ve published it below the screenshot of the rejection email.

Screen shot 2013-05-27 at 6.00.26 PM

You’re reading this via Yahoo!’s Contributor Network. It’s a biproduct of a company called Associated Content (here’s their Wikipedia entry) which Yahoo! bought two years ago this week for about $90 million. The way it works? People like me — random, basically anonymous people in the eyes of Yahoo! — go, click to sign up, and start writing. (It takes a few minutes; I joined the Contributor Network about three minutes before writing this sentence.) If your article is accepted, Yahoo! will pay you, and the rates actually aren’t terrible. Well, the flat rate is, at $2 to $15 for an unsolicited piece like this one, max, and many get $0. But there’s a “performance” rate too. A post on the Voices network could get you $2 CPM — that’s $2 per 1000 pageviews — which isn’t bad at all for basically random content.

But I’m not writing this here for the handful of quarters that this may earn. I’m writing it here to demonstrate a point. Like most everything else I’ve written to date, if anyone reads this, it’s going to be because I’ve tried to bring the first round of readers to this article. There’s little chance of this being featured by Yahoo! (especially because of the topic, but put that aside). Yahoo! sees value in whatever traffic I bring in, and that’s really the only reason they’re allowing it to be published here.

Yahoo!, of course, has professional writers who create the content for Yahoo! News and the rest of their network. Take, for example, this article about Taylor Swift not being a Justin Bieber fan. Yahoo! paid the writer to write that, and, I assume, the author isn’t the one driving traffic there. It’s coming from the front page; that’s why it has dozens of comments in about an hour and a half. And here’s another bet I’m willing to make: Yahoo! pays that writer a lot more than the functional equivalent of the $2 to $15 flat rate she’d get if it were a left-for-dead Y! Contributor Network article. And how much traffic does she have to drive to earn any money? Zero.

In short: Yahoo! pays more for writers than it does for traffic drivers.

This is a very traditional route, akin to what the New York Times and legacy media companies do, but it doesn’t make a lot sense in the digital, massively defragmented world Yahoo! actually exists in. Most articles that they feature are increasingly a commodity, yet they pay those top dollar. On the other side, there are individual with audiences who are willing to send those audiences to Yahoo!’s sites — and therefore, to Y!’s ad impressions — for a cut.

But instead of embracing this, Yahoo! seems to be running away. They just bought Tumblr for two orders of magnitude more than they paid for Associated Content, and there’s little reason to believe that any of the Tumblr bloggers. Most Tumblr bloggers shouldn’t get paid, of course, just like most random essays written on the Y! Contributors Network won’t garner any pageviews and therefore won’t earn any pennies. But there are a few Tumblr users who have really large audiences. Take this guy, for example, who writes for four different sports Tumblrs with more than half a million followers each. At this point, he could pretty easily drive thousands of page views a day just by producing content within the Yahoo-owned Tumblr ecosystem. But will Yahoo! pay him for it?

I doubt it. What he does is a lot more valuable than this article. But if you’re reading this, I’m getting paid.

This is backward. Yahoo! should find a way to pay the traffic drivers, not (just) the writers.

Originally published on May 27, 2013