Studying the link economy

I talk a great deal (too much, some would say) about the link economy as the essential architecture of media on the net. Now we are launching an ambitious research project at CUNY’s Tow-Knight Center for Entrepreneurial Journalism to bring facts and modeling to the discussion. The goals:

• to learn how to optimize the value of links—on both sides of a click;
• to explore a framework to enable content- and audience-creators to negotiate a mutually advantageous exchange of value—that is, a content marketplace appropriate for the net;
• to investigate alternative methods of content distribution and value exchange—asking whether it’s best for readers to come to content or whether there are alternative ways for content to travel to readers; and
• to investigate the link’s impact on the economics of the larger news ecosystem—e.g., how it can make news more efficient (this is where I say, “Do what you do best and link to the rest”).

To begin the discussion and the research, here is my treatise on the link economy. We’ll take this to media companies, aggregators, and others asking for data on their links and we’ll then use this to recruit researchers to analyze that data, test assumptions, and make recommendations.

The hypothesis

There are two creations of value in media online: the creation of content and the creation of a public—an audience*—for that content. Online, content with no links to it has no value because it has no audience. It gains value as it gains links. Thus something of worth is created on each side of a click.

That’s the start of the treatise; the entire text is below.

The treatise continues to list questions about each side of the click, from the perspective of the link creator and the link recipient. Then it looks at an alternative view: rather than making readers travel to content via links, content (with branding, ads and revenue, analytics, and links attached) travels to readers. That leads to much larger questions about where the value in media really resides today: in the content or in the relationships and information about them that media create.

I’m eager to get your feedback and ideas about how to pursue this. If you have data about how various kinds of links perform, we’ll be eager to work together. If you are an analyst researcher who can help, please step forward. I’ll continue to keep you informed on this work……

Link Economy Treatise

  • http://burden.ca/blog/ Tim Burden

    Greetings,

    Not to bitch and moan, Jeff, but this would have been easier to read if it was just pasted into the blog entry.

    Now to the point: I think you need to say more about the value of a link on the link originator’s side. Nobody, at least nobody reasonable, questions the value of being on the receiving end of a link, but what, precisely, are the benefits for the generous act of linking out? And how does it turn into money?

    You pointed out the ability to summarize quickly with a link, so that story details which have already been well-covered don’t have to be repeated, and that is certainly a benefit to the user. But from a financial perspective, a publisher may well want that summary on his own site, to increase his own Google-juice for the related search terms.

    And obviously Google and aggregators of content make a good buck on doing nothing but link out to other sites and move the user off their own sites as quickly as they can.

    But what else is in it for the publisher, to do this linking out business?

    • Andy Freeman

      > But what else is in it for the publisher, to do this linking out business?

      Would you ask “what’s in it for authors to cite other work?”

      I ask because links are actionable citations.

      On the assumption that citing other work is valuable, I’ll ask how making citations actionable reduces that value. I ask that because if links have no value but citations do, actionable must be reducing that value somehow.

      Note that authors are free to demand payment in return for citations.

      • http://burden.ca/blog/ Tim Burden

        “What’s in it for authors to cite other work?”

        It bolsters your argument and your credibility, if what you’ve cited is also credible.

        Of course, scientific authors aren’t in business per se.

        And Google, for example, doesn’t improve your position in SERPs based on how many credible outbound links you have. That would be quickly and punishingly gamed.

        So how you’d measure this increase in credibility and what impact it would have on your bottom line are open questions.

      • Andy Freeman

        > It bolsters your argument and your credibility, if what you’ve cited is also credible.

        > Of course, scientific authors aren’t in business per se.

        Scientific authors aren’t the only ones interested in credibility. Almost all long-form non-fiction uses cites. Yes, even self-help books.

        Are you saying that journalists aren’t interested in their credibility? Or, are you saying that journalists have no need for anything to bolster their credibility?

        > So how you’d measure this increase in credibility and what impact it would have on your bottom line are open questions.

        Yes, but your original claim was not that the value was unknown, but that there arguably wasn’t any value, so why bother.

        > And Google, for example, doesn’t improve your position in SERPs based on how many credible outbound links you have.

        Not so fast. While naive pagerank transfers credibility from linker to linkee and not the other way, that reverse “link” is used by search engines to determine many things, some of which affect SERPs. (Naive pagerank has been completely gamed at this point.)

      • http://fantasticlife.posterous.com/ Michael Smethurst

        Actually replying to @timburden but there’s no reply button there so…

        > Google, for example, doesn’t improve your position in SERPs based on how many credible outbound links you have.

        Actually, since the launch of google caffeine that’s exactly what happens. In old school pagerank outbound links were generally seen as leaking google juice which is why publishers did all the nasty link sculpting with no-follows everywhere. Caffeine changes that and rewards links with page rank. So linking to a competitors story or background research for that story will increase the findability of your content

        > That would be quickly and punishingly gamed.

        possibly. but a lot of publishers don’t seem to have spotted this fundamental change to indexing. i haven’t seen it being gamed yet

  • rick
  • http://www.edwardiglesias.com Edward Iglesias

    Very interesting. As a librarian I see many of the same issues arising in Academic Libraries. We are moving from a place to a provider and must compete in the marketplace of information. The optimization of links becomes crucial when paying > $100,000 a year for a database. It gets used but we can determine how much a click costs. If 10 people a year use it that’s $10,000 per user and not sustainable. If it has over 100,000 clicks a year is it still sustainable when similar information is available from “free” sites paid for by advertising?

  • Stan Hogan

    Jarvis has been touting his fantasy of a link economy for years. Now, someone is paying him to see if it actually exists.

    What a racket.

    • JohnNL

      You say fantasy, I say hypothesis. You say someone is paying him to see if it exists, I say someone is paying him to perform an experiment to test his hypothesis. You see a racket, I see science.

      • Stan Hogan

        I don’t have a lot of faith is “scientific” research launched to confirm a pre-determined conclusion.

      • Andy Freeman

        > I don’t have a lot of faith is “scientific” research launched to confirm a pre-determined conclusion.

        You must not be a journalist, as they tend to love “research” launched to support a pre-determined conclusion.

  • Nanker Phelge

    >>>Online, content with no links to it has no value because it has no audience. It gains value as it gains links.

    This is true, but only in a very limited way. In a newspaper world, all readers are worth about the same amount – let’s say $75 per thousand, to use a hypothetical but realistic number. The more readers you have, the more money you get – roughly at that rate.

    Online, that’s not true. At the Financial Times, where registered users pay for content, some readers could be worth more than 30 pounds per thousand – in addition to what they pay to read the content. At the Huffington Post, where much (but not all) of the traffic comes from SEO and leaves quickly, those readers might be worth as little as $3 per thousand. (Obviously, their registered users are worth more.) That’s a HUGE difference!

    So, yes, content gains value as it gains links. But the value it gains from most of those links is minimal. Loyal readers are exponentially far more valuable – and most of them don’t arrive through links. So while there is certainly a link economy, it’s a very bleak one for everyone except Google. Hey, didn’t they made a donation to the Knight Foundation?

    • http://mymediainfo.com/ Renee

      Exactly! In essence all links and all readers are not at all equal.

    • Andy Freeman

      > At the Financial Times, where registered users pay for content, some readers could be worth more than 30 pounds per thousand – in addition to what they pay to read the content.

      The “worth” of a reader to a specific advertiser does not depend on whether that reader is registered.

      The price that you can charge a specific advertiser to show an advert to a given reader depends on that reader’s known characteristics.

      Yes, one way to discover a reader’s characteristics is to have them register, but it’s not the only way. Moreover, the smart readers know that registration is for your benefit, not theirs, so they demand something in return.

      Previously, I mentioned that the linkee might pay the linker. Reader characteristics are one type of information that the linkee might be willing to pay for (because the linkee can charge advertisers based on said characteristics).

      • Nanker Phelge

        >>>Yes, one way to discover a reader’s characteristics is to have them register, but it’s not the only way.

        True. But it’s the only honest and practical way to acquire that information without paying, or giving up revenue, for it.

        >>>Moreover, the smart readers know that registration is for your benefit, not theirs, so they demand something in return.

        In the case of the FT or the WSJ, what they get in return is the paper. Many people think this is worth it – most of them _also_ pay a fee.

      • Andy Freeman

        >>Yes, one way to discover a reader’s characteristics is to have them register, but it’s not the only way.

        >True. But it’s the only honest and practical way to acquire that information without paying, or giving up revenue, for it.

        Note the weasel word “paying”, because we know that publications will pay other orgs for such information.

        Strictly speaking, the sentence is true, because any means to gather information will involve expense, but the two implications, that there’s no honest or practical way and that respectable publications would not engage in such, are wrong.

        Some of the honest and practical means involve observing reader behavior.

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  • http://cwanderson.org C.W. Anderson

    The topic of this comment is: “what do we mean by ‘value’”?

    Jeff and I operate from a similar baseline background, which makes this more of a friendly “have you thought of” rather than a critique per se. Though there are elements of critique here.

    The proposed research project is invaluable (in the context of the rest of the comment, you might consider this a pun). My concern is with the way that link “value” here operates as an unproblematic concept that ultimately reduces to “economic gain.” Value, though, is an *over-determined* concept and there are many kinds of value (or as the sociologist Pierre Bourdieu might have put it, there are many different kind of capital http://en.wikipedia.org/wiki/Cultural_capital#Relation_to_other_types_of_capital)– cultural, economic, social.

    I know why Jeff is taking the hard-line economic tack that he is on this project — skepticism from traditional media types that there is “value” (meaning money) in linking. My concern is that, in so much of the journalism conversation these days, economic crisis and an entrepreneurial spirit often reduce questions of value to “can I make a buck off this?” Given all that, I’d argue:

    1) The primary value of of linking may not be economic, even if linking does contain economic value.

    2) People who link may do so for cultural reasons, not economic ones (take citation in academia, for instance. While one could argue that the ultimate economic success of a scholar lies in her presence in the Citation Index, the journey from “cited” to “tenure” to “salary” is a long and winding one. When people cite in academia they are doing so because it is a scholarly convention, and only secondarily because it is seen as value generating in any meaningful way. And legal citation is a whole different ballgame, and so on and so forth. The point is not to say there is no $ value in scholarly linking, but just to say that the process is complicated).

    3) The truth of points 1 and 2 does not de-value linking (hahaha, there I go again), but rather enhances it. Journalists should link even if it makes them not a penny.

    To conclude on a self-serving note. I think a fun corollary to this project could be to run a day long side-conference bringing together the best academic research on links in journalism to dialog with this report. In addition to whatever public launches are planned. I’m thinking here of rising academic star Mark Coddington’s work on links (he of Nieman Lab Week in Review Fame), and my own work on links as “objects of evidence.” And there are many others doing similar work. While I doubt many journalists would want to sit through a traditional academic confab, perhaps there is a way to structure something that is more fun than usual panel boredom.

    All that said: this looks great, Jeff. Good luck.

    • http://www.buzzmachine.com Jeff Jarvis

      Thanks much, Chris. Absolutely agree that links bring value in many more ways: reputation, generosity, service to readers, service to the record, service to scholarship……
      But you’re right that in this case, I’m taking a hard-line economic viewpoint for just the reason you cite: showing legacy media people that there is economic value in the links they receive and then — this is the critical part — seeing whether there is the framework for a marketplace (that is, a basis of negotiation) or even an exchange (an entity that facilitates that negotiation) to help them realize some of that value (so they would stop demonizing and start valuing links, bringing them more into line with the architecture of the net).

  • Jess

    A link to Scribd is a link of no value whatsoever. I usually don’t even click on them, and I remembered why when I clicked on this one.

    It’s your text, be kind to your audience and keep it in text form!

  • http://www.thepomoblog.com Terry Heaton

    I think the point we miss, Jeff, is that we’re talking about the wrong kind of content. The content that has value today is made by the people formerly known as the advertisers. You want to follow the money, go there. Links matter (more) there.

  • Eileen

    OT.

    It is many years later, Jeff, and I used to come here daily – back in the day when you were one of the first blogs. Kudos to you for that!

    I remember those fiery threads where the jihadists showed up (daily), kat and I defended against them, and there was that night that I called out Bill Keller on his bona fides (guess he’s gone now). . . and USCENTCOM showed up to defend against the threats a few of us were receiving here.

    Good times, good times. /

    In any event, just checked in to say hello. Hope you’re not still a NWO/hopey/changey type guy. I am glad to see you’re alive and well.

    My best to you and your family, Jeff.

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  • Daniel Shostak

    Hi Jeff and All:

    1. I would refer everyone to the Clue Train Manifesto (http://www.cluetrain.com/)and other early works regarding the networked economy. In general, these pre-internet bust folks argue that the value is in the size of the network.

    2. We need more clarity. Hard economics is not a term of art. Do you all mean activities that immediately and directly lead to an exchange of only money? All activities that lead to a direct exchange of money in the present and future? All activities that lead to an exchange of value either presently or in the future?

    3. Another question is what are we actually trying to value: Information, research, journalism/reportage, media in general, or only online media journalism?

    4. I would suggest starting out small and examine whether economic value (dollars, euros, etc) has been created by online journalism in the recent past. With a little help, we could ‘look back’ three or five years ago to identify online journalism sites and then track their progress. Once we have a baseline, we can add further nuance with additional data about network size/growth, language, location, ownership, valuation, earnings, etc.

    5. Unfortunately, a more full analysis would become challenging. For example, the internet allows materials to have an infinite lifetime, even after the creators are no longer active; this would create a valuation challenge. Another question is location/language issues. For example, the largest online journalism/news site in Thai, will be considerably smaller than many English language sites, though more influencial in Thailand.

    Interesting challange! I’m will to think it through more if others are game.

    Daniel
    Strategic Affairs Forecasting LLC

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  • JohnNL

    Maybe I’m not aware of the full background, but what is proposed in this post sounds scientific to me. I read about hypothesis, gathering data, analyzing it and drawing conclusions. Am I wrong?