Free Markets, Free People

Daily Archives: February 14, 2011


New Media feudalism?

Huffington Post was just sold to AOL for $315 million.  Good stuff.  An online media effort makes big bucks.

But David Carr throws out some interesting commentary about that and the online culture that does cause me to pause and think  about it.  The paragraphs that grabbed my attention were:

It will be interesting to see how the legions of unpaid bloggers at The Huffington Post react to the merger with AOL. Typing away for an upstart blog — founded by the lefty pundit Arianna Huffington and the technology executive Kenneth Lerer — would seem to be a little different from cranking copy for AOL, a large American media company with a market capitalization of $2.2 billion.

[…]

Perhaps content will remain bifurcated into professional and amateur streams, but as social networks eat away at media mindshare and the advertising base, I’m not so sure. If it happens, I’ll have no one but myself to blame. Last time I checked, I had written or shared over 11,000 items on Twitter. It’s a nice collection of short-form work, and I’ve been rewarded with lot of followers … and exactly no money. If and when the folks at Twitter cash out, some tiny fraction of that value will have been created by me.

He has a point.  Maybe not the one he thinks he has, but there is a point to be made here.  It’s one thing to labor away at a blog like QandO which is a personal decision and a labor of love.  I don’t do it for money nor do I expect to earn a living doing it here. If someone were to come along and offer a pile of money for the place, I’d take it, but it would be money I and the other bloggers earned by developing the place and writing here.

But what about those sites which encourage community, give bloggers access and then use the demographics (which bloggers helped create) to actively sell advertising and raise revenue?  And, like HuffPo, what if they sell?

Well, without out legal agreement that your participation is worth x amount in either area (advertising or a sale) you haven’t a leg to stand on.  You agreed to whatever stipulations they had in place when you entered your first post, if there even were any.

So what happens now with HuffPo?  The paid bloggers/journalists will most likely continue to be paid.  But what about the bulk of bloggers/diarists/citizen journalists there?  Will they continue to write?

I mean that’s a big change.  Those that have helped build that sites reputation now know what their work built.

So will they be willing to continue on adding to its value without compensation?  Or will they demand a piece of the pie or withhold their content?

And if they do withhold their content, will others be willing to step forward and take their place.

HuffPo also has the argument that all of the value isn’t to be found in the contributions of the bloggers/diarists/citizen journalists there.  And that’s probably true – but HuffPo (and now AOL) can’t deny part of the value must be contributed to them.

The point of all of this is it changes, fairly dramatically, the thinking of many who participate online in a “free” capacity helping build a brand.  HuffPo definitely has a brand.  

You have to ask then, what are AOL’s expectations for non-paid bloggers?  And, on the other side, are non-paid bloggers willing to continue working for nothing but adding value to AOL’s brand?

Interesting questions, interesting times.  For whatever reason I keep hearing the “echo” of “union” floating around.  Hopefully bloggers will avoid anything like that – a loose federation or association would serve as well, but I have to say, if bloggers are adding value to a site such that a 2 million dollar investment can grow to 315 million, they ought to have an understanding going in that they get a share in compensation for their contribution – or not.  Their choice.  But there should be a choice.  And a smart entrepreneur is going to attract the brightest and best by providing one.  And such a site or sites would keep the “feudal” sites from becoming more prevalent than they are today.

~McQ


It is budget day in Washington DC

Today is the day President Obama’s budget is published.  It promises “cuts” and “savings”.  Before we venture too far in our analysis of the budget, let’s be clear on what those two words usually mean in Washington.  A “cut” in spending usually means that whoever is saying it is talking about not spending as much as originally planned.  And neither have a thing to do with debt reduction.   What they actually mean is they’re still going to spend buckets of money we don’t have – they’re just not going to spend “buckets and buckets” of it.

“Savings” is normally used in about the same way.  I call it wife math (my apologies to the ladies, but come on, admit it, you’ve used it).  Wife math announces, “I saw this scarf on sale for $75.  It is normally $100.  I "saved" $25.”   Of course what she really did was spend $75 that perhaps the family didn’t have or couldn’t afford.

So when you see or hear the words “cuts” and “savings” in discussions of the budget this year, please understand the context of the words when used in those discussions.  “Cuts” mean they don’t plan spending as much as they originally planned to spend.  In the case “cut”, not a single dollar has yet been spent, but they’re going to try to convince you that those “cuts” translate into “savings”.  For most of us “savings” means we have spent less money on necessities (by being frugal)  and the money we’ve saved (i.e. actual money in hand – not borrowed, but earned) can be applied to paying down something else– such as credit card debt or something.  Yeah, it’s real money we have in hand, not spending we “cut” from something we didn’t have the money for to begin with.

Not so with double talking Washington – “savings” in their jargon means not spending as much.  It is slightly different than “cut” in that “savings” are usually “realized” from a proposed program of spending while “cuts” usually come from an existing program of spending.   In the case of “savings” what is “saved” can’t be applied anywhere because we’re in a cycle of deficit spending.  It isn’t revenue they’re talking about that they can spend elsewhere to reduce the debt, it is borrowed money of which they don’t plan on borrowing as much.

This year alone we’re looking at a record deficit of 1.6 trillion dollars.  What they’re talking about “saving” over the next 10 years (1.1 trillion – or 110 billion a year – chicken feed in 3.x trillion dollar budgets) is simply proposed reductions on what they had planned to borrow.  Meanwhile the debt continues to climb.

Keep in mind that we’re looking a 4 years worth of budgets from the administration with over a trillion dollars in deficit spending.  What they’re trying to do is soften that with is 1.1 trillion in “cuts” and “savings” over 10 years that will help “reduce the deficit”.  I’m sure you’re able to do the math and realize total debt keeps climbing.  But also remember that “cuts” and “savings” are what are going to be trumpeted, not the truth:

An administration official, who spoke on condition of anonymity before the budget was released, said one-third of the $1.1 trillion in deficit reduction the administration is projecting over the next decade would come from additional revenue with the bulk of that reflecting the limitations on tax deductions by the wealthy.

So not only are they “cutting” money they don’t have or haven’t spent, they’re “saving” money that will trim the deficit (while the debt still goes up) by assuming revenue not in hand.

The point?  Well, when you see things like this from AP Economics Writer Martin Crutsinger …

“Two-thirds of [the budget's] savings [of $1.1 trillion over 10 years] would come from spending reductions including $400 billion in savings from a five year freeze on spending in many domestic government agencies. The other one-third of savings would come from tax increases. The biggest tax hike would come from a proposal to trim the deductions the wealthiest Americans can claim for charitable contributions, mortgage interest and state and local tax payments. The administration proposed this tax hike last year but it never advanced because of widespread congressional opposition."

… You’ll now know how to translate it. 

I mean where else would you find a line like “the other one-third of savings would come from tax increases” than in a Washington DC budget discussion?

Confused?

Well join the club … and it will get worse.

~McQ