My First Year With the Kindle

I am not a music person. Don’t get me wrong, I enjoy listening to music. But my taste in music has never been an important part of my identity, and listening to music has never really been something I devoted a whole lot of time to. For that reason, the iTunes revolution didn’t impact my life quite as dramatically as it did for some people I know, for whom music is a very crucial part of their lives.

What do matter to me are books. I read a lot of books, and always have. However, the digital revolution in books lagged way behind the one in music. We can’t know the reason for this, but there’s one story that intuitively makes sense to me. By the time the web was born, CDs were already the primary way we were getting our music, and CDs were a digital format. It was trivially easy to rip songs from those CDs to our computers, which made piracy just as trivially easy once people started going online in large numbers. This created pressure to create legitimate, low-cost alternatives to Napster. In the publishing industry, however, we were still working with essentially the same “analog” product that humanity has known since Gutenberg; a physical, printed book. It takes a big time commitment to scan books page by page to turn them into something digital.

Amazon had built its empire on book sales, and despite the fact that they had started selling just about everything else under the sun, they weren’t about the rest on their laurels. Jeff Bezos knew the digital disruption would be coming to books eventually, and he wanted to own it rather than have Apple or someone else come in and dominate the future of a category that had been Amazon’s bread and butter. Learning the lesson of the iPod, he would offer a device with a tightly integrated content ecosystem. In 2007 he announced the Kindle, which was just such a device.

The Kindle basically created the market for ebooks, and has dominated that market as a result. Barnes and Noble’s Nook is in a distant second, and Apple’s iBook store has less than half of Barnes and Noble’s market share (source).

The Kindle and Me

Despite my love of reading, I waited for years before I took the plunge. In 2009, after Amazon deleted people’s copies of Orwell’s 1984, I thought I might never trust them enough to buy into their ecosystem. However, after the PR firestorm that rained down on them after that, I’m confident they wouldn’t pull it again–as the big fish in the ebook pond they are being scrutinized very closely, so they’re unlikely to be able to accomplish it by stealth, either.

2009 was the first year where I was really tempted, too, as I moved out of my parents’ place and into an apartment, which meant moving my books. I left behind the majority of my books, but the ones I took still amounted to a ton of boxes. Knowing that this was not going to be my last move, I started wondering whether physical books were worth the hassle.

I wasn’t really pushed over the edge until last year. I can pinpoint a single event that did it–the publication of Tyler Cowen’s The Great Stagnation. It wasn’t just that a brilliant economist at the school I got my MA from was publishing a purely digital book. It was also that just about everyone in the economics blogosphere was talking about it. It was a $4 digital book that kicked off a fascinating debate and, really, set many of the parameters of the discussion around our current economic predicament. After watching this unfold, I couldn’t help myself–I really, really wanted a Kindle.

I asked for it for my birthday, which was three months later. Now, almost a year later, I currently have 62 items on my Kindle. I have read a ton, to put it mildly.

To put it plainly, I love my Kindle, and I love the Amazon ecosystem. The device itself is much lighter to hold than a book is. You don’t have to worry about holding it open or turning pages, so you can hold it with one hand. The fact that it isn’t a fully-featured computing device is definitely a plus in terms of avoiding distractions. I can also read my books on just about any computer–from my iPhone to my laptop. If I forget my Kindle at home, I can still continue whatever book I was reading by logging into my Amazon account and reading it in the browser.

2011 turned out to be a year where a lot of Great Stagnation-style, straight to digital short, cheap books came out. The other one that drew a similar amount of attention was Erik Brynjolfsson and Andrew McAfee’s Race Against the Machine, but there were also Ryan Avent’s The Gated City and Alex Tabarrok’s Launching The Innovation Renaissance. I read blogs by all of these people, and when they announced their books, it was just too easy to follow the Amazon link and click “Buy now with 1-Click”. As my friend James Long eloquently put it, “any interesting Kindle book which costs less than $5 feels free to me because of a floating point error in my internal processor.”

Similarly, when bloggers or people on Facebook or Twitter that I trust recommend a book that is less than $2, it is hard to resist snapping it up. Authors and publishers are clearly learning to take advantage of this–I recently read Child of Fire, a fantasy novel that goes for $0.99. The price of the next book in the series jumps up to $5.99, and the third one goes up to $7.99.

To legacy publishers, ebooks may seem like a mixed bag as they threaten their margins. To authors who haven’t been able to make it big in the old system, however, there are new opportunities. Take Tim Pratt, whose Marla Mason series was cancelled before it was finished due to lack of sales. So he serialized the book on the open web and sold the complete version directly through the Kindle store. He was among the first to call my attention to the growth that indie authors with a strong fan following were seeing for the Kindle titles when he tweeted the following:

[blackbirdpie id=”28825354055″]

I’ve talked about how Scott Sigler has taken advantage of the ebook scene–I actually just finished reading Nocturnal on my Kindle before I started writing this post (though that one came out through his publisher). And Amanda Hocking captured everyone’s imaginations last year when it became clear that she was making some serious money off of her Kindle sales.

One thing I don’t like about Kindle books, compared to print books or just open, non-proprietary digital standards, is that my friends can’t borrow my books. With a print book, if I love it and have a friend I think would too, I can just hand it to them. While a subset of Kindle books have “lending” enabled, where you can let one other Kindle user read it through their account, most Kindle books do not.

However, Kindles keep getting cheaper and cheaper. The cheapest one right now is $79, and I will bet good money that we’ll eventually see a $20 one. In a world with $20 Kindles, having a secondary one that you lend to your friends seems a lot more plausible.

And one thing I love about Amazon as a company is how relentlessly they push down prices. One of the books on my Kindle right now is an item from their Lending Library. If you have Prime membership and a Kindle device, you can get one book a month for free from a subset of their catalog that are part of the program. I just read the entire Hunger Games series this way, without paying a penny.

In short, I have really enjoyed my first year in the Kindle ecosystem. It’s really a very exciting time for anyone who loves to read.

Information, Food, and Democracy

I am a skeptic on the subject of food diets but have been a true believer in the information diet for a long time. I am pretty sure that Clay Johnson had the opposite sort of reader in mind when he wrote The Information Diet.

As I read the book, I kept thinking of things I wanted to respond to and aspects I wanted to explore. But in the spirit of restraint which the book embodies, I will hold myself to just two posts – an overview of my own information diet, and this broader response.

Information Mania

Back in 2004 I was extremely into the political blogging scene and thought that all mainstream news was utter crap. My reasoning was pretty straightforward – bloggers actually linked to things in order to provide context. They didn’t pretend to be objective; they wore their ideologies and biases on their sleeves. The distorting news cycle that mainstream media operated on, and the narrow perspective they approached everything from, drove me crazy. I excluded it from my information diet as much as possible.

I had family members and friends who I could see develop a kind of mania as they followed more traditional news outlets. They didn’t want to talk about anything but politics. They made blunt statements that were insulting to anyone who disagreed with them, under the assumption that no one did, and were genuinely surprised when it turned out this assumption was wrong.

The section of Johnson’s book where he talks about his relationship with his Uncle Warren, a Fox News faithful conservative, really touched a chord with me.

The conversation, viewed from the outside, couldn’t have been considered coherent. It was just an explosion of nonsense—two grown men shouting at each other about taxes, gun control, and healthcare, with some perfectly good turkey between us. That Thanksgiving, Uncle Warren left early, and things haven’t been the same between us since.

I myself came right to the brink of such a fallout on several occasions. Of course I realize now what Johnson has also realized; that my own behavior and my own information diet were part of the problem. I fell into an “us versus them” mentality and I selected for blogs that fed into that. Despite adamantly refusing to affiliate myself with either political party, I was still drawing a line in the sand; my people against everyone else.

It was extremely bad for me. It made me unhappy and dissatisfied, and every so often I would become downright unpleasant company.

I was right about mainstream news, but was unwilling to recognize that the problem was not the medium but the type of content. Since I considered myself a part of the new media crowd, I didn’t give new media as critical an eye as I did traditional media. The only exception was the critical eye I turned to those blogs of a different point of view.

I’m still a techno-optimist and I still think that most news is crap, but I have come to realize that there is a lot more crap on the Internet than off of it. This is because there is a lot more of everything on the Internet, good and bad. The digital age gives the producers of crap some new, powerful tools that they didn’t have before, as Johnson describes:

Even more than television, Fox routinely tweaks the news on the Web to make the news more palatable to its audience. Even when it takes content from other sources like the Associated Press and puts it on its website, the organization tweaks the headlines to make them more attractive to its conservative audience. The AP’s story “Economic Worries Pose New Snags for Obama” turned into “Obama Has a Big Problem with White Women.” “Obama to Talk Economy, Not Politics, in Iowa” turned into “White House Insists Obama’s Iowa Stop for Economy, Not 2012.” And “Malaysia Police Slammed for Cattle-Branding Women” turned into “Malaysian Muslims Cattle-Brand Prostitutes.”

Fox isn’t about advancing a conservative agenda. For its parent, News Corporation, it’s about the dollars. Fox changes these headlines on the Web not because it has an agenda, but because people click on them more, meaning that more advertisements can be shown, and more money can be made.

So I have, for some time now, agreed with the general proposition that the information we consume has an effect on us on our emotional and intellectual state of mind. This is an idea that is old and familiar to me, and it is a crucial part of the story told in The Information Diet.

But it isn’t the whole story.

Food Morality

Something else that is common among certain members of my family and friends is the propensity to moralize on the subject of food.

A lot of the time, this centers on the “obesity crisis” or “obesity epidemic”; something that is apparently a very important public health issue. An uncle of mine once assured me that it was only a matter of time before national life expectancy began to fall as a result of this problem.

The food moralist’s story is a key piece of the story that Johnson wants to tell in The Information Diet. Consider the following:

Today, 13.5 million people die each year of heart disease and stroke, and 4 million from diabetes-related complications–far more than die in automobile accidents. heart disease is now our number one killer, and it takes more people to the grave in the United States in five years than all our war-related deaths combined. Instead of dying from the cold of winter, we find death in cholesterol.

The way this story is framed is at odds with my understanding of the material progress that has been made in developed nations over the last two hundred years. But I didn’t want to just dismiss it out of hand, so I went to see if the known facts were what I had thought that they were.

The following are the facts, as I understand them, with links to primary sources.

First, my uncle’s comment aside, life expectancy has been rising consistently for centuries. It’s been rising more slowly in the last few decades than it was, say, right after the discovery of penicillin. Nevertheless, it has continued to increase. I understand that the past is not prophecy; it could start to decline. But it hasn’t so far.

But what about the specific risk factors of being obese? What about heart disease and stroke? After all, as Johnson points out, “heart disease is now our number one killer.”

Just because something is the biggest relative cause of death does not mean that it is a bigger problem than it used to be.

According to the CDC, “Overall, death rates for heart disease and stroke have decreased in the United States in recent decades.” They hasten to add that “rates for incidence and death continue to be high”, and to talk about how it is higher among some socioeconomic groups than others. But they don’t include a breakdown of whether those higher rates have increased or declined – a number I would be very interested in seeing.

According to the American Heart Association, “From 1997 to 2007, the death rate from [cardiovascular disease] declined 27.8%” and “the stroke death rate fell 44.8%, and the actual number of stroke deaths declined 14.7%.” Not only is the stroke death rate down, the actual number of deaths is down despite the larger population. This is not the rate at which people who contracted these diseases died from it – this is the number of people that died of these diseases per 100,000 people in the overall population.

This 1997-2007 period is squarely in the middle of the 1990-2010 period that Johnson cites as one of enormous growth in the obesity rate. People were getting fatter but the things that they are at higher risk for was killing them less often. This is hardly finding “death in cholesterol”.

Now, these are just the death rates–it could be that the incidence rate of heart disease and strokes has increased, but medical science has advanced so far that it’s actually overcompensated and the number of people per 100,000 in the population that actually died of them decreased. And I’m not saying that it’s a good idea to be overweight, or that you can eat nothing but chocolate for three meals a day, seven days a week. Obviously dietary choices have health consequences; a friend of mine knew someone in college who ate nothing but ramen for a month and actually ended up getting scurvy.

I just don’t see the smoking gun here. This is no existential threat, no “crisis”; this is a lot of people eating in a less healthy manner than a physician would probably recommend. But they are still, on average, living longer. In particular, the things that overweight people are at risk for are killing them less often.

I believe that what we eat is a personal and quality of life issue, not a moral one. Some people may have less energy and feel bad about themselves because of the kind of food they eat regularly. On the other hand, some people may be happy eating food that they enjoy but being overweight to some degree. There are trade-offs to be made, and everyone must weight those trade-offs for themselves.

This disagreement over whether food is a moral issue or a personal one is paralleled in the conversation about information.

Saving Democracy

Johnson does not just want you to fix your information diet for the sake of self-improvement. He wants you to do it because he thinks it will be good for democracy.

The role that information plays in influencing politics is complicated and difficult to measure. It’s something that my father thinks long and hard about over at The Fifth Wave.

Johnson appears to hold to what I would describe as the traditional progressive hypothesis: the more informed the governed, the better the quality the governance in a democracy will be.

once you lose the fluff and start really seeing what’s going on, new priorities arise that require new tactics to accomplish.

He recognizes that there isn’t a straightforward relationship between the amount of information available and policy outcomes. For instance, he spends a whole section taking down the notion that mere “transparency” is actually effective at holding policymakers accountable.

Like the calorie counts from food, transparency is ineffective at arming the masses unless there’s a strong will in the public to arm itself with the knowledge of how this information affects us, and how to effectively read the metaphorical labels. People will be no less obese—and no less ignorant—unless they have the will to consume less of the stuff that’s bad for them, and more of the stuff that’s good for them. While transparency can help the problem, it alone cannot fix it.

Admitting that mere transparency isn’t enough to achieve mass enlightenment does not mean that Johnson thinks such enlightenment is impossible, however.

He then offers a laundry list of how you can make a difference, ranging from the kinds of problems you should focus on:

My plea to you is to start sweating the small stuff at the expense of some of the big stuff. Washington isn’t the land of vast, radical changes, it’s a battleship waiting to be nudged in the right direction.

Nudges such as:

If you’re worried about federal spending and the budget, don’t concern yourself over the debt-ceiling debate. Work to change procurement laws so that government can get access to the same things the private sector has without paying an arm and a leg. We spend so much time figuring out what programs to spend money on, comparing their priorities to one another, and blanket cutting them when they’re deemed too luxurious. It’s the equivalent of trying to lose weight by cutting off your legs. Optimizing how government spends its money is at least as important as figuring out what our money gets spent on, and there are real, pragmatic solutions to getting there.

There are also tools available to us, and tools yet to be made, that can help us do the job.

We can also improve our government without waiting on government to act. Organizations like PopVox.com, for instance, make it easier for people to translate what they want their representative to do into the language our representatives speak. There’s a whole world of technology out there waiting to be used to help members listen to their constituents, and it’s likely—now that much of our discussions about politics are public—that we don’t need government to act: we can build tools that listen to what people are already saying, make that information public, and question our elected officials when they’re voting against their constituencies.

I’m not denying the value in what he’s saying, I just really wonder how much exhortations like these are going to make a difference.

I don’t pretend to any special knowledge on the relationship between information and politics, but it seems to me that when you write a book encouraging people to have a nice, balanced, reasonable information diet, it encourages people to be nice, balanced, and reasonable. In my admittedly limited experience, it is rarely the nice, balanced, and reasonable people that move history.

I keep going back to the circumstances where policy or norms moved in a direction that I, personally, consider to be good. For instance, when the web rose up against SOPA and PIPA and managed to get those bills tabled. In my opinion, it wasn’t the well informed, reasonable people that made that happen. It was Wikipedia and other major websites going dark and essentially sending the message “STOP SOPA OR NO MORE WIKIPEDIA/LOLCATS FOR YOU”, lighting a fire under the typical web user to get pissed off in their representatives’ direction.

Or a much more important example, the civil rights movement. Martin Luther King and the student activists of the 1960’s were not just nice and reasonable people, they were extremely shrewd about the media of their day and the rhetoric that they used. They picked their battles very carefully to have the maximum emotional impact.

That is what I thought of when I read the following line in The Information Diet:

As much as I’d like to use the political skills I’ve learned in the past 10 years to drive a traditional campaign, doing so would go against the principles of the book.

Call me cynical, but I tend to think that if the problems that Johnson thinks are solvable do get solved, it will be because some very effective propagandists and rhetoriticians get behind it. It won’t be because people are suddenly more reasonable and informed, and decide en masse to get behind the solving of practical problems.

That’s just my instinct. It doesn’t help that I went to a grad school that distinguished itself in the field of Public Choice theory, which tends to make you skeptical of the notion that a more informed populace translates into better policy outcomes.

I should also say that I’m skeptical of the hypothesis that things are so much worse and so much more polarized than they were in the past. I think the fact that we all share this big information space called the Internet means we’re exposed to the loud and angry among us much more than we used to be. I also think that technological change and an increased overall wealth now allows us to support the Fox News’ and MSNBC’s–the Krispy Kreme donuts of information intake–rather than the bland mass products of old like CBS News. But I don’t really think those bland mass products were any better for us.

A Book Worth Reading

So I don’t really think a good information diet is going to save democracy, but I do think that there are big benefits to be had by taking the time to scrutinize your information diet. Johnson made me think not just about the content I consume, but the amount of time I spent obsessively checking for updates.

The Information Diet is, for me personally, exactly the kind of meal I need to have more often in my own information diet. It challenged my perspective on a number of margins but was reasonable and inoffensive while doing so. More than anything, it made me think. It also introduced me to interesting tools like EveryBlock.

I really can’t recommend this book enough. It’s only 160 pages long and very well written. I got more out of reading it than I have from books three times its length.

Once you’ve read it, I recommend Darrell Huff’s classic How to Lie with Statistics as a good companion piece. It’s even shorter than The Information Diet and is an excellent guide to sorting the sense from the nonsense.

Scott Sigler’s 1,000 True Fans

Four years ago, Kevin Kelly wrote a post describing how creators could achieve success in a small niche. He called it the 1,000 true fans strategy.

A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.

The point is not that you specifically need 1,000 of them, but that a small number of these true fans can be enough to let an artist make a living. Seeking to cultivate such fans is a far more reasonable goal than trying to ride a blockbuster to the head of the tail.

Some information recently released by writer Scott Sigler reminded me of Kelly’s post.

Few people have invested in building up their fan base the way that Sigler has. He pioneered the podcast novel years ago, giving away his book in weekly audio installments. He has a website which fans can register on in order to comment on specific posts and episodes, interact with one another on the forums, and even update a wiki about his science fiction universe. Whenever someone signs up on his site, he gives them a shout out in that week’s podcast. If you post a lot on his site, he will include you as a character in one of his books–usually a character that meets with a grizzly end, which his fans eat right up. He also has a very active presence on all the major social media, and responds to the fans who engage him there.

He has reaped the benefits of investing so thoroughly in his fans. First, he got a book deal with the small publisher Dragon Moon Press. That book managed to rocket up the Amazon rankings on the strength of his fans’ promotional efforts alone, which then secured him a book deal with major publisher Crown.

However, Sigler has continued to publish his Galactic Football League series independently, without any backing from Crown. He and his business partner, A Kovacs, started Dark Overlord Media for the sole purpose of publishing the first book in the series, The Rookie. They published a high-end book with a lot of extra goodies and charged a steep price–more than $30.

They pulled it off, and have continued to publish the successive books, iterating their approach each time. They’re now on their fourth book and have hit on a formula–determine the number of physical books to be printed based on pre-orders, and after the last physical book has been delivered, only offer digital versions. This minimizes the financial risk to them–they only print as many as there’s demand for–but you have to have pretty devoted fans to pull this off, since they have to pay the money well before the product even exists.

The post that made me think of Kelly’s 1,000 true fans was this one by A Kovacs:

It took us fifteen hours to sell 1,000 copies of THE MVP. Fifteen is not a lot of hours:

  • In 2009 it took us 13 days to sell 1,000 copies of THE ROOKIE.
  • In 2010 it took us 6 days to sell 1,000 copies of THE STARTER.
  • In 2011 it took us 3 days to sell 1,000 copies of THE ALL-PRO.

Do they ever say “the fourth time’s the charm?” If not, I might start saying that myself; try and make it a thing. Scott and I have been very happy with our year-over-year performance, but I won’t lie: it is some kind of wonderful to be able to move 1,000 copies of a premium-priced, plushed-out hardcover in less than one day.

The books cost $34.95, so Dark Overlord Media just basically made $35,000 in fifteen hours. Certainly, you will have to subtract the cost of printing from that, and certainly, since Sigler has a partner it won’t all go to him. But you can bet that they continued to sell more books after those first fifteen hours, and that this isn’t the only source of revenue they have going in.

One of the crucial changes they made this time around was to include a free digital copy of the book for anyone who purchased the hardcover. In fact, 2011 saw a big shift in Sigler’s digital strategy in general; he started offering more small purchases in the Kindle store, like this short story collection which started off at a promotional price of $0.99 in order to get him more exposure on the Amazon rankings.

I was curious how much of a difference ebook sales have really made to his bottom line, so I asked.

His answer surprised me.

I expected that ebooks were a big part of his success in 2011, I did not expect that they were already the majority of his company’s revenue.

I think this is in large part because it helped what true fans he had to promote him to more marginal fans. As Kelly explains:

This small circle of diehard fans, which can provide you with a living, is surrounded by concentric circles of Lesser Fans. These folks will not purchase everything you do, and may not seek out direct contact, but they will buy much of what you produce. The processes you develop to feed your True Fans will also nurture Lesser Fans. As you acquire new True Fans, you can also add many more Lesser Fans.

Every so often, for instance, Sigler’s big publisher Crown would discount the digital version of one of his books they had published, often without even letting him know. When he noticed, he would announce it to all his fans across social networks and his own site. This was a call not just to pick up the cheaper copy for themselves but to let others know about the discount; people who might not otherwise have made the plunge to buy the book are much more likely to do so when it’s going for a dollar or two. This in turn helps him build up his fan base yet further.

All in all, Sigler should serve as inspiration for creators who are trying to find their place in the new digital landscape. You don’t even have to make it as big as he is in order to make a decent living. And then you’re living the dream of making a living off of your creations; what more could you ask for?

 

Homesteading the Open Web

Look at four other social things you can do on the Net (along with the standards and protocols that support them): email (SMTP, POP3, IMAP, MIME); blogging (HTTP, XML, RSS, Atom); podcasting (RSS); and instant messaging (IRC, XMPP, SIP/SIMPLE). Unlike private social media platforms, these are NEA: Nobody owns them, Everybody can use them and Anybody can improve them.

-Doc Searls, Beyond Social Media

Unlike Searls, Zittrain, and many others, I am not greatly bothered by the fact that a huge amount of our social interactions are taking place on privately owned platforms like Facebook or Twitter, and an increasing amount of stuff we used to use the web for is being done on privately owned platforms like iOS. From an economic point of view, I think it’s good for someone to have a vested interest in investing in these platforms.

It cannot be denied, however, that a user of Twitter is much more a tenant than a landlord; they can be kicked off without any reason whatsoever, if the company desires it. Moreover, the consolidation of such a large and distributed platform under one company gives it many of the characteristics of a technology of control. This is obscured by the fact that it has already been the tool of resistance in several countries; and certainly it isn’t straightforwardly one or the other. But Twitter is a single company that hundreds of millions of people are using as a communications platform; it therefore is one big target for regulators and tyrants the world over.

Consider: they recently announced that they created a way to censor tweets in specific countries without removing them globally. They knew that in order to enter certain markets, they would be forced to comply with some less than thrilling local regulations on freedom of expression. As a company, the decision was either to stay out of those markets or comply with the regulations. So they came up with an approach that wouldn’t allow local censorship to extend its reach globally, and they announced it before anyone asked them to use it in an attempt to preempt the bad PR this would inevitably bring.

That will never happen on a blog like mine.

I pay for server space and a domain name, and I use WordPress’s software. If the hosting company tried to mess with me, it is trivial to move to another one. If WordPress makes changes I dislike, or somehow builds tools for censorship into its code, I can swap it for Moveable Type or any number of alternatives. I regularly backup my data, so if someone seized the servers it was on I would not lose it.

In short, I have carved out a small piece of real estate in the open web.

Now, the advantages to platforms like Twitter are undeniable. No one is going to Twitter in order to see what the latest thing I have to say or share is; they go there because everyone they might be interested in hearing from is there. Most of the time this blog sees very little traffic, while I have conversations on Twitter and Facebook basically every day of the week.

Again, unlike Searl, I do not see the rise of these walled garden platforms as onerous. But I do think everyone should consider homesteading the open web; setting up something that is truly theirs that they can invest in over time.

That is part of the reason why, after seven years on Blogger, I decided to jump ship and start this site.

If you’re interested in this but aren’t sure how to proceed, my friend Lauren is offering to help people for free, if you sign up for a Bluehost account through her site. Many hosts have easy, one-click options for installing WordPress after you’ve paid for space, so you probably won’t even have to worry about the technical aspects of installation.

Just as there are benefits to having privately owned platforms, there are definite benefits to having something that you own from end to end.

 

A Tale of Two Audiences

Disclaimer: the following is simply a hypothesis, a story if you will. I submit it to you with no pretension of either originality or authority.

When content companies look at their incoming traffic, they divide them into two general categories–referral traffic and direct traffic.

They’re both fairly self-explanatory. Referral traffic comes from people who found you from somewhere else. The biggest category of this in general is search traffic, but links from Facebook or Twitter, or someone’s blog are also typical sources.

Direct traffic, as the name implies, is made up of people who go directly to the site. Often this means that they are loyal followers of your content.

A loyal user is much more valuable than someone who finds an article of yours from Google, gives it a look, and then never comes back again. They’re more valuable in the quantifiable sense that they see your ads a lot more than that drive-by search user, but they’re more valuable in less obvious ways as well.

The vast majority of the traffic to the big content sites is referral traffic. While the individual user may be less valuable than the individual in direct traffic, the total amount of revenue from referral traffic is much larger. This is the reason that the internet is rife with SEO spam and headlines that are more likely to get clicked if tweeted. Search traffic alone is a gigantic pie, and empires have been built on it alone, with practically zero direct traffic.

However, having a loyal user base that comes to your site regularly is extra valuable precisely because it is likely to get you more referral traffic. Consider: loyal users are more likely to share a link to content on your site from Twitter, Facebook, Tumblr, Redditt, or a good old-fashioned blog. This is exactly the kind of behavior that generated referral traffic–both directly from people clicking those links, indirectly from those people possibly sharing the links themselves, and yet more indirectly if they link from their blogs and thus improve your Google ranking.

Of course, even within your loyal base there is variation in how valuable a particular user is. Guy who has read the Washington Post for forty years and has just moved online is less valuable to the Post than someone like Mark Frauenfelder, who might link to one of their articles on Boing Boing, improving their Google ranking further and sending some of his traffic their way. But it’s still useful to think broadly about direct traffic vs. referral traffic.

The Porous Wall

Back in March, the New York Times launched something like a paywall. There are numerous particulars and exceptions, but the long and short of it is that someone like me, who only ever visits the Times when someone I know links to it, faces no wall of any sort. Meanwhile, someone who has loyally visited the Times every day for years will have to pay if they want to see more than 20 articles a month.

At the time, Seamus McCauley of Virtual Economics pointed out the perverse incentives this created: the Times were literally punishing loyalty without doing anything to lure in anyone else. Basic economic intuition dictates that this should mostly result in reducing the amount of direct traffic that they receive.

The Times did spend a reported $40 million researching this plan, and while I’ll never be the first person to claim business acumen on the part of the Times, you have to think they did something with all that money. As usual, Eli had a theory.

[blackbirdpie id=”52741320770469891″]

Imagine, for a moment, that all of the Times’ direct traffic was composed of individuals who were perfectly price inelastic in their consumption of articles on nytimes.com. That is, they would pay any price to be able to keep doing it. Assume, also, that all of the Times’ referral traffic was perfectly price elastic–if you raised the price by just one cent, they would abandon the site entirely. The most profitable path for the Times in this scenario would be, if possible, to charge direct traffic an infinite amount to view the site, while simultaneously charging the referral traffic nothing so they keep making the site money by viewing ads.

The reality is a less extreme dichotomy–though I wouldn’t be surprised if a significant fraction of the Times’ referral traffic did vanish if they tried to charge them a penny. Still, the direct traffic, while undoubtedly less elastic than the referral traffic, is unlikely to be perfectly inelastic.

Getting a good idea of just how inelastic would be a very valuable piece of information for the Times to have, and I think Eli is right that that is exactly what they spent the $40 million on–that, and devising the right strategy for effectively price discriminating between the two groups.

It’s too soon to tell if the strategy will work for the Times, or if it’s a viable strategy for any content company to pursue.

Come One, Come All

2011 also saw the birth of a new technology website, The Verge.

The Verge began after a group of editors from Engadget left, in the spirit of the traitorous eight, because they believed they could do it better than AOL would allow them to. During their time at Engadget, they had developed a following through the listeners of their podcasts and their presence on social media–Twitter in particular. They also were fairly active in the comment sections of their own posts.

In order to bridge the gap between the launch of the new site and the departure from the old one, they set up a makeshift, interim blog called This Is My Next, and continued their weekly podcast. This kept them connected with the community they had built around them and allowed them to keep building it while they were also working on launching The Verge.

There are a lot of things that I really like about The Verge. First, they bundled forums into the site and gave people posting in them practically the same tools that they use for the posts on the main site. The writers themselves participate in the forums, and any user’s post that they find particularly exceptional they will highlight on the main site and in The Verge’s various social network presences.

Second, they do a lot of long-form, image and video rich, niche pieces that may take time to get through but which just have a kind of polish which is rare among web-native publications.

When I told a friend of mine about how much I loved these pieces, he very astutely asked “but it costs like eleven times as much to make as a cookie-cutter blog post, and do you really think it generates eleven times more revenue?”

This question bothered me, because in a straightforward sense he seems to be right. Say that Paul Miller could have written eleven shorter posts instead of this enormous culture piece on StarCraft. There is no way that The Verge made eleven times as much in ad revenue from that post as they would from the eleven shorter posts he could have written.

But posts like that one attract a certain kind of audience. I may not read every long feature piece that The Verge does, but I like that they are there and I read many of them. The fact that they do those pieces is part of the reason that I made them my regular tech news read rather than Engadget or Gizmodo.

In short, the clear strategy being pursued by The Verge is to reward their most loyal audience, even if it doesn’t directly result in more revenue than trying to game search engines. There isn’t always tension between the two strategies–one of the sites features is called story streams, pages like this which make it easy to see how a particular story has unfolded so far. It also is one more page that could potentially show up in Google search results.

Still, having followed the group very closely at Engadget first, and now at the Verge, it seems clear to me that the core mission is to build up the loyal visitors. If a feature piece costs eleven times as much as a shorter one, but makes a loyal reader out of someone who indirectly brings 100 visitors to the site over time by sharing links on Twitter and Facebook, was the feature piece profitable?

The Verge is even younger than the Times’ paywall, so time has yet to tell if their approach is sustainable.

Farming Referral Traffic

At the onset of 2011, a big rumble was building in the tech community about Google’s search quality. Many claimed that it had become filled with spam. Google was not deaf to these criticisms, and argued that spam was actually at an all time low. The problem wasn’t spam, they argued, but “thin content”–and what have come to be called content farms.

The logic of the content farm is that with enough volume, enough of your pages will make it high enough in search results to get you enough referral traffic to make a pretty penny. In short, a content farm focuses its efforts on acquiring referral traffic and foregoes any real effort to build up direct traffic.

This in itself isn’t a problem, of course. If you have 500,000 of the greatest articles ever written by mankind, then you, Google, and search users are all better off if you rank highly in relevant search results. And many companies that took a beating when Google began targeting thin and low quality content for downranking have cried that they were unfairly lumped in with the rest just for having a lot of pages.

The content farm controversy aside, there is a clear and obvious place for a site that has an audience made up almost entirely of referral traffic–reference sites. Wikipedia, for instance, at one point received somewhere in the neighborhood of 90 percent of its visits from referral traffic. Though it is probably the biggest receiver of search traffic, it is not unusual in this regard–there is a whole industry of people whose livelihoods are made or broken by the various tweaks of Google’s algorithm.

The Path Forward

As I said, much remains uncertain. Five or ten years from now we’ll look back and be able to say which experiments proved to be the models for striking the balance between these audiences. For my part, I can only hope that it looks more like what The Verge is doing than what the New York Times is trying.
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