Value Added

Image representing Google News as depicted in ...
Image via CrunchBase

When you go to a restaurant, they don’t charge you only for the cost of the ingredients used in preparing whatever it is you’re eating. In addition, you’re paying for the preparation of those ingredients, the people who serve you and see that you’re comfortable, the building itself, and a profit margin. What you’re really paying for is the value added by the kitchen staff to those ingredients and the rest of the staff in serving them.I’m sure you’re not reading this for a lesson in macroeconomics and I’m not expert enough to give you one. But it is a topic that’s bubbling up in the digital space these days.  What’s raising the notion of value added in my mind is the use of content created by one web site on another. You’ve probably been on a dozen sites – Drudge, HuffPo (to name two extremes), Google News – that aggregate other sites’ content and surround it with advertising. In theory, the traffic the aggregator drives back to the source more than makes up for the fact that they’re using content they didn’t produce themselves.  In a perfect world, they’re adding their own value as well to justify making some money off of others’ labor.
I’m not a lawyer so I won’t get into the nuances of “fair use.” But what strikes me as important is the notion of value-added. What value does an aggregator bring and why should they receive compensation? Convenience? Timeliness? A forum that wouldn’t otherwise exist for commentary and conversation?
Google News is the biggest aggregator – it aggregates headlines from more than 4,500 English-language news sources around the world and provides links to articles on their websites – and until now hasn’t attempted to make money from the content of others.  With that changing, a number of content generators are rethinking the business model.  It should be a relatively easy analysis – look at how much traffic you’re receiving from sites using your content and how much money you’re making from the traffic.  The difficulty is that many of these sites post so much of the original article that there is little or no incentive to click through to the source.  How can one track that?  More importantly, how can you make money from it?
There has never been a question that using other folks’ content without compensating them is stealing. When you’re adding value to the original product, it’s one thing.  The question is if you’re not adding anything but making money from others’ raw ingredients, what form that compensation should take.  Maybe traffic isn’t the answer any more.  What is?  Anyone?

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Filed under digital media, Thinking Aloud, What's Going On

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