How to make original content production profitable on the Internet
Fantastic Wired piece on Demand Media, a $200 million, profitable, growing-like-crazy company that produces original online content. And it's not porn. How? Algorithmically generated article ideas, written Mechanical Turk-style for about $15 apiece.
But once it was automated, every algorithm-generated piece of content produced 4.9 times the revenue of the human-created ideas. So Rosenblatt got rid of the editors. Suddenly, profit on each piece was 20 to 25 times what it had been. It turned out that gut instinct and experience were less effective at predicting what readers and viewers wanted — and worse for the company — than a formula.
Even the comments section has fascinating stuff. From a Demand writer:
We are paid in residuals, which means nickels and dimes trickling in over the long haul. But they add up. I clear about $1,000 a month at eHow, and as I build up my library there, I expect that income to rise by quite a bit.
Which actually ties in with someone Demand's cartoon character CEO said:
Long term, we’ll make more money by increasing quality.
And I bet he means it. Only, can a public company afford to think about the long term?

This is Lukas Bergstrom's weblog. You can also find me on Twitter and LinkedIn.

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