I’ve heard the idea that the “Link Economy” as it’s called is the future of monetization on the web. The concept is simple: incoming links from as many sources as possible equals dollars. Lately, this has been brought loud and proud to the forefront as the AP tries to figure out new and exciting ways to charge people who use their content (and by people I mean bloggers and so on) and how to DRM it.
But isn’t an incoming link worth something? If someone links an AP story, doesn’t the AP get some value out of that? Not according to Arnon Mishkin.
[W]hen the AP and the newspaper owners demanded that they get revenue from the linkers, it was clear that they just didn’t understand the web and didn’t appreciate all the value they were receiving from link traffic.
Well, the data suggests that the web – the “blogosphere”– is less an ecosystem than a one-way street.
The vast majority of the value gets captured by aggregators linking and scraping rather than by the news organizations that get linked and scraped. We did a study of traffic on several sites that aggregate purely a menu of news stories. In all cases, there was at least twice as much traffic on the home page as there were clicks going to the stories that were on it. In other words, a very large share of the people who were visiting the site were merely browsing to read headlines rather than using the aggregation page to decide what they wanted to read in detail. Obviously, this has major ramifications for content creators’ ability to grow ad revenue, as the main benefit of added traffic is the potential for higher CPMs.
Of course it’s a one-way system. I may scan a page of headlines and never click through to any one of them. What value does that link bring when it simply shows me all your content and I get to decide if I go there or not? On the reader’s end, that’s ideal. On the publisher’s end though, how is that sustainable as a business?
The obvious answer is of course it isn’t. I’m just glad someone finally had the cojones to go after one of the sacred cows of the blogosphere in 2009; the link economy is a fabrication. People like Jeff Jarvis will argue with you that the link economy is the most important thing on earth, and that ignoring it will doom you to peril and a trip to the deaths of luddite hell. In reality, though, don’t we want that to happen? Don’t we want the chaff to fall off?
To put it in link economy terms, if the AP decides to shutdown links in some fashion, and the other sources don’t, won’t the other sources thrive, assuming the link economy is driving their business? Won’t Reuters, AFP, or any of the other news syndicators start seeing an uptick in this link economy? If the link economy is truly a merit system where the successful thrive and incoming links are king, the companies accepting the incoming links will easily float to the top over the ones who don’t.
If that’s that case, what’s there to worry about? I’ll tell you. Deep in the hearts of its loudest advocates, those who believe the link economy will drive the future of online media don’t really buy the product they’re selling.