The Secret About Marketplaces. Shhh.
Here's a riddle for you. If 500 word articles written by people on Rent A Coder cost $5 each, how much money would you have to spend to generate as much content as About.com?
Answer: A little over $350M (based on about 71M about.com web pages listed in Google). That's not including all the cost associated with coming up with the topics, proofing the content, and posting it to your web site.
It has always been a challenge to come up with good, fresh content. Auto-generators are one answer. Auto-generators, however, are best for attracting the spiders (e.g. Google, Yahoo, and MSN), since the content they produce is not yet good enough for humans. RSS feeds are a form of machine-generated content, but unlike the articles they syndicate, RSS feeds are not original content. That makes them good for attracting humans, but ironically, bad for attracting the spiders.
Wikipedia generates content through the participation of users. So does TripAdvisor, with its millions of user-generated travel reviews. Craig's List. Judy's Book. Or any popular old-fashioned forum on the net, from SearchEngineWorld to the multitude of shopping and discount coupon forums.
But the value of user-generated content is no secret. Seed a forum of any form with a topic people are interested in, and users will start to generate content. That creates value for users and for the site owner. The resulting content can create revenue opportunities through advertising or lead generation.
What is a secret is that marketplaces are a wonderful form of user-generated content. Traditional user generated content has an ulterior motive (as TV networks do with TV shows), that is, to sell advertising. In a marketplace, the user generated content is what is monetized.
The items on a marketplace have some inherent value. Unlike banner ads, these items do not suffer from downward price pressure the way advertisements do. Publishers everywhere say that their CPM rates for banner ads and the like are getting pushed lower and lower. Marketplace items do not suffer the same fate.
eBay of course is the largest example of a successful online marketplace. Many new marketplaces are coming online across a variety of categories, from leads to loans.
In the past, such marketplaces have not been possible due to the overwhelming strength of large players or a lack of standards.
But competition is heating up. Marketplaces are the secret new user generated content and they are going to spread like wildfire across every category where there are buyers and sellers. With marketplaces, there is no ulterior motive. Marketplaces are about money. Plain and simple.
Answer: A little over $350M (based on about 71M about.com web pages listed in Google). That's not including all the cost associated with coming up with the topics, proofing the content, and posting it to your web site.
It has always been a challenge to come up with good, fresh content. Auto-generators are one answer. Auto-generators, however, are best for attracting the spiders (e.g. Google, Yahoo, and MSN), since the content they produce is not yet good enough for humans. RSS feeds are a form of machine-generated content, but unlike the articles they syndicate, RSS feeds are not original content. That makes them good for attracting humans, but ironically, bad for attracting the spiders.
Wikipedia generates content through the participation of users. So does TripAdvisor, with its millions of user-generated travel reviews. Craig's List. Judy's Book. Or any popular old-fashioned forum on the net, from SearchEngineWorld to the multitude of shopping and discount coupon forums.
But the value of user-generated content is no secret. Seed a forum of any form with a topic people are interested in, and users will start to generate content. That creates value for users and for the site owner. The resulting content can create revenue opportunities through advertising or lead generation.
What is a secret is that marketplaces are a wonderful form of user-generated content. Traditional user generated content has an ulterior motive (as TV networks do with TV shows), that is, to sell advertising. In a marketplace, the user generated content is what is monetized.
The items on a marketplace have some inherent value. Unlike banner ads, these items do not suffer from downward price pressure the way advertisements do. Publishers everywhere say that their CPM rates for banner ads and the like are getting pushed lower and lower. Marketplace items do not suffer the same fate.
eBay of course is the largest example of a successful online marketplace. Many new marketplaces are coming online across a variety of categories, from leads to loans.
In the past, such marketplaces have not been possible due to the overwhelming strength of large players or a lack of standards.
But competition is heating up. Marketplaces are the secret new user generated content and they are going to spread like wildfire across every category where there are buyers and sellers. With marketplaces, there is no ulterior motive. Marketplaces are about money. Plain and simple.
1 Comments:
Hey Dave, it's been a long time (since the days of onDevice!) I just moved to Portland and hit on your blog while filling out employment history for a job app.
I had an interesting discussion similar to what you're talking about in this article regarding social networks, college students, and video games. Effectively, some of the largest user-driven content sites are those like Facebook, and My Space. They've recently emerged after the "slow" start of social networking blogs like this site and LiveJournal. However, since becoming popular with "kids these days", they've taken off as an inexpensive source of ad revenue. However, there is a serious intrinsic value to much of this user-driven content. Personally, I've pulled tons of stock photos off Facebook, and nearly every radio station, rock group, and aspiring artist has a "pimped out" MySpace page. I even heard several advertisements for concerts and bands on many local radio station.
Additionally, look at sites for videogame mods like Curse Gaming and The Elder Scrolls Source. There are literally millions of lines of (arguably) good code that has some value to it. Especially considering that Blizzard is considering requiring digital signatures for their mods (basically, they're trying to control the mod market via an approval process).
Of course, freely available code is not something new (see SourceForge), but gaming gives it that "ulterior motive" you were speaking to in your post, and I feel that the true value lies in being able to "target" users with value (or at least be an easy target for users).
These don't have the obvious online marketplace ties that your examples of eBay and loan sites, but will someone figure out a revenue model for creating successful MySpace.com pages or providing an aggregated mod source for non-technical video gamers? They probably already have...
Anyways, you're watchlisted, so I hope to hear from you soon. BTW... cool site and I like your "Read My Messages" page. Neato.
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