While content engines have been around for a while, their growing presence is influencing how readers explore the web. They are also taking on a new importance as vanguards of “native advertising,” a trend that many hope will reinvigorate the online ad economy.

Here’s an overview of the content engine industry and what it means for publishers, advertisers and readers. (To learn more about the latest publishing strategies, be sure to attend paidContent Live, April 17 in the New York).

Keeping readers close to home

New York magazine uses a variety of tactics to increase visits to its website and to induce readers to stay on the site. These include boxes showing its most-popular stories as well as cross-promotion arrangements with other news sites.  New York has also recently signed on with content engine nRelate, which uses algorithms to display other stories a reader may find interesting; the stories come from New York’s own site or one of its affiliates.

nRelate promises publishers more pageviews but also a new revenue stream as a result of “sponsored stories” it inserts in the list of recommended content – if a reader clicks on the advertiser’s “story” (typically a promotional article written like a news story) the publisher and nRelate share the money.

Michael Silberman, the GM of digital media at New York, says he welcomes the chance for extra revenue but that the main purpose of the nRelate experiment is to get readers to stay on the site. And, like so much in publishing these days, the outcome will be data driven. “We’ll do A/B testing to see if there’s an overall lift. If all it does is redirect traffic we would have had anyways, it’s not worth it. If it leads to more pageviews per visit, then yes,” said Silberman, adding that publishers have to take care that tools like nRelate don’t clutter or slow down the site.

Tools like nRelate promise more money or traffic but they also represent a growing strategic importance for publishers. The reason is that, in age of the social media, fewer and fewer readers arrive at a website directly through a publisher’s home page; this means that publishers are doing more than ever to persuade them to stick around.

“We find [Outbrain] quite useful as a tool to drive traffic to our sites and circulate traffic through our sites.  The numbers suggest that our users find it useful as well,” said John Lerner, CEO of Breaking Media, which owns sites like Above the Law. (see screenshot at right). He did not provide specific numbers.

Meanwhile, the content engines are also a source of money. Joshua Albertson, the President of Curbed Media, says in a good year, they can bring in six figures of revenue through its sites Curbed, Eater and Racked.

Rivals collide on a new advertising frontier

While tools like nRelate hold promise for publishers, they’re also being pitched as a way for advertisers to break through to readers who tune out conventional online ads. The idea is that, by packaging the ad as a story to “read next,” a reader is far more likely to click on it and digest the marketing message.

This ad format – call it “native advertising” or “content marketing” or whatever you wish – has produced a growing list of companies that want to serve up sponsored stories. The biggest of these is Outbrain, which has already received $64 million in funding and claims to be on more than 90,000 blogs and websites like Slate, whose editor, David Plotz, says he has been pleased with the three-year partnership.

“We’ve been really happy with it. We needed to provide related links and Outbrain combines it with a tool that makes quite a lot of money for us.”

Outbrain’s hold on the market is far from firm, however, as competitors have been peeling away some of its clients. According to Curbed’s Albertson, the company decided to switch after it found Outbrain’s performance declining and rival Taboola offered it a bigger share of advertising revenue. Here is a screenshot of Taboola, which serves both stories and video and recently received $15 million in new funding:

As the rivals move in, Outbrain has begun slapping its logo on its boxes of recommended stories in an effort to be seen as a brand. It also recently fired a quarter of its advertising clients because of the poor quality of their story content. The company explained the decision this way:

“If companies coming into this space are not respectful of the audience who are clicking on these links, then the user trust will decline over time. That means this space — which is currently so valuable to the audience and publisher — will be just like the the display ad market. People will become ‘content link blind,’ just like they became ‘banner blind.’”

Meanwhile, other companies are pivoting from their core business to get into the content engine game too. These include dictionary company Reverb, which believes its experience with syntax will make it good at finding content, and the commenting platform, Disqus.

In an interview, Disqus CEO Daniel Ha said the company has an advantage due to its existing relationship with thousands of publishers, and the ability to offer brands a way to reach hyper-engaged comment communities. Ha added that the Disqus strategy is based on the “independent web” and “the middle-tail of websites,” pointing to examples like a Toronto Maple Leafs fan forum and coupon site Southern Savers.

A boom or a bubble?

Content engines may be a hot topic but is there enough money and web real estate to go around? Neil Mody, the CEO of nRelate, says there is not. “There’s a classic network effect. You’ll get one big winner. Numbers two through five will do OK. Numbers 6 thru 20 will go niche or fail.”

Mody says there is already evidence of a coming shakeout. He claims some content engines are paying publishers to get on their sites even though they have no ad revenue. He also says the industry is over-capitalized and that there is risk of a backlash as some content engines flood the space with junky “lose your belly” type of articles.

Another challenge for content engines is the low cost of switching for publishers. The engines are built so that it’s easy for publishers to put them up, but also take them down — a situation that doesn’t favor long-term relationships. The result is that publishers can simply sign up with whomever offers the best content or most money. This means the winner is likely to be content engine with the best algorithms and the highest quality advertisements.

The five episode series will highlight Asian buns, deli sandwiches and other non-spendy staples that provide a respite from the city’s often surreal dining prices. The magazine’s food writers will also take viewers into the kitchens of hot spots like Pok Pok Ny and Eataly where chefs will show how the affordable creations are made.

And in a city prone to crazes like artisanal mayonaise stores or bacon-on-everything, the video series will of course highlight New York’s latest food trends. Here’s a segment, inspired by the 50th anniversary of McDonald’s Filet-O-Fish, that explores a wave of new-fangled fish sandwiches popping up across New York:

The Cheap Eats video is part of Hungry, a new food-centric premium YouTube channel produced by multimedia studio Electus. The channel is also working with Women’s Day to bring the magazines’ Casserole Queens to video.

From a business perspective, the foodie partnerships appear to make strategic sense. New York gets an opportunity ot bring its popular food feature to a polished video stage where it can be discovered by subscribers and tourists alike. Meanwhile, Electus can use the print publication’s credibility to attract an audience for its new channel. As for the cash question, YouTube will help monetize the content and share the proceeds with Electus.

(Image by Altin Osmanaj via Shutterstock)

This week, Advertising Age has a good account of how New York became a profitable online success story. The article explains how an early embrace of digital is helping New York outstrip others:

Consumer magazines draw only about five percent to fifteen percent of their ad sales from their digital operations, analysts and insiders say. New York‘s digital properties, by contrast, account for forty percent of the company’s total ad sales.

The publication is pouring these new revenues back into reporting and has created a virtuous cycle in which high-quality journalism attracts high-quality ads. As Ad Age explains, New York’s high profile reporting has helped it reach beyond a regional audience:

New York Media sites drew 4.8 million unique visitors, according to ComScore, providing the scale that large marketers require. And with nearly 80 percent of its online audience coming from outside New York, the publication gives star political writers Frank Rich and John Heilemann a national platform.

The magazine’s new prominence has also succeeded in attracted valuable luxury brand advertisers like Bergdorf Goodman.

It’s a nice story but New York may be an outlier and not a model for other city magazines. One reason is that New York invested early enough to turn the digital corner before print revenues started their dramatic decline; it may be too late for others to do the same. The magazine may also be a special case because the size of its regional market provided a big enough base to scale into a national audience. It seems unlikely that city magazines in Philadelphia, Seattle or even Chicago could do the same, no matter how great their writing.

For now, the future of city coverage may belong to specialists like Curbed Media which, like New York, has pulled in major marketers (see our profile on Curbed here). It do so by offering high-quality reporting on local niches like real estate and food under a common brand. Perhaps city magazines can work out a similar strategy.

Lehrer shouldn’t be excused for cribbing from himself. But it’s not that surprising that it happened.

“Big ideas” aren’t unlimited

Jonah Lehrer, in the model of fellow New Yorker staff writer Malcolm Gladwell, is a “big ideas” writer. He writes books that center around a counterintuitive or provocative theme, and explains why things are not as they seem. Books like these are often really popular.

So far, the criticism toward Lehrer has centered around the fact that he copied his own sentences, but copying ideas and themes is also problematic. There is not unlimited material for this kind of pop science writing. It varies in quality, a lot. Malcolm Gladwell’s “The Tipping Point” was better than his later books like “Outliers,” partly because the idea behind “The Tipping Point” was better and the examples were fresher. (Similarly, when Malcolm Gladwell tried to apply the counterintuitive thing to protests in Egypt and Tunisia, people got mad.)

It is tough to come up with new, fresh material that advances a counterintuitive thesis. It’s even tougher to repeatedly come up with those new “wow, I never looked at it that way” ideas. And when you do come up with those ideas, it’s probably more tempting to recycle them.

Writing isn’t public speaking

Authors like Lehrer and Gladwell do a lot of public speaking along with writing gigs. (Here are some of Lehrer’s public appearances.) In public speaking, borrowing from yourself isn’t such a bad thing. Many public speakers recycle material from one presentation to the next. Presumably, they tailor that material depending on whom they’re speaking to, and don’t give the same presentation to the same group twice. (Slate’s Josh Levin points to Malcolm Gladwell’s disclosure about how he handles his obligations to the New Yorker versus his obligations as a public speaker.)

Lehrer’s self-borrowing is easy to discover because he has written for a lot of high-profile publications — Wired, the New Yorker, the New York Times — that attract similar audiences. The examples discovered so far are vivid and memorable — the logic puzzles, the “love making.” That could mean that there is a lot more similar content waiting to be discovered, but it’s clear that Lehrer tends to repeat similar memorable themes. That’s not so bad in his role as a public speaker, but it’s problematic for a journalist.

Lehrer recently did a video interview with GigaOM’s Chris Albrecht. It’s below.

Amy Odell, previously editor of New York magazine fashion blog The Cut, is editor. They are joined by former Jezebel writer Anna North as senior editor and Hillary Reinsberg, who wrote for Abrams Media’s “The Jane Dough,” as associate editor. (Former Rolling Stone writer and Gawker editor Doree Shafrir is executive editor of BuzzFeed.)

BuzzFeed is launching the new vertical as part of its push to become a fully fledged news site. Several high-profile bloggers have joined the site in recent months, including Politico‘s Ben Smith, Rolling Stone contributing editor Michael Hastings and Shafrir. There is a Tumblr devoted to these hires, “Has Buzzfeed Hired Anyone New Today?“

Odell tells Fashionista that Shift will stand out from competitors like Gawker’s Jezebel and The Awl’s The Hairpin: “I feel like women’s media, especially Jezebel and The Hairpin which I read and I love, has identified the issues facing us as women. We don’t want to just highlight that they’re out there and that they exist but we want to move past them. We’ll do that through interviews with very successful woman–whether it’s the CEO of a successful fashion company or a senator and find out how they got there and what it’s like. There aren’t that many women out there in positions of power and we want to talk to the ones who are to find out how they got there so we can be like them too.”

In her inaugural post, Odell writes that Shift will cover questions like these:

How can women bridge the gap between our income and our male counterparts’? How can we attain the power we need to make decisions about our own bodies? How can we be taken seriously as we work toward those things while indulging in a little mindless feminine fun, like shopping, reading Us Weekly, or tweeting about how Nicole Kidman looked like a big Vajazzle at the Golden Globes?

Sports, Too

Buzzfeed also launched a sports vertical today, BuzzFeed Sports, edited by BuzzFeed Senior Editor Jack Moore and Kevin Lincoln, who will be deputy editor of the vertical.

The site has played a vital part in New York‘s rejuvenation, complementing the print edition while creating its own identity. Bringing someone in with a wire-service news background should help with urgency and news focus. New York says unique users were up 30 percent at nymag.com over the first four months of 2010, based on Omniture (NSDQ: OMTR) SiteCatalyst numbers, for a monthly average of 7.3 million.

Continues mobile push: A free Android app featuring the five blogs is slated to launch Thursday. For the record, that’s Daily Intel (NSDQ: INTC) (news); Vulture (entertainment); The Cut (Fashion); Grub Street (food and restaurants); and and The Sports Section. New York promises to store five days of content for offline browsing. The mag has a MenuPages.com app on iPhone but this is the first nymag.com app.

Frequently mentioned as a possible media investor or buyer, most recently, Wasserstein was on the short list of potential bidders for BusinessWeek, now being acquired by Bloomberg L.P. More detailed accounts of his life can be at NYT, WSJ and Bloomberg.

Later this week, NYMag.com adds another blog, Surf from Emily Nussbaum, television critic and editor-at-large for the magazine. [Ed. Note: Surf's official launch is Monday.] The magazine has long been known for its critics and columnists but that hasn’t always translated online. This looks like a step in that direction: Nussbaum’s blog will be personal, meant to highlight her voice and complement her work in the mag and on the site. It’s also a step towards more online TV coverage by NYMag.com in coming months. Both blogs launch with sponsors: Capital One Retail Banking for The Sports Section and HBO for Surf.

NYMag.com has kept its number of blogs low so far, emphasizing instead frequency and depth. The four daily blogs are Daily *Intel* (news), The Cut (fashion), Vulture (culture and entertainment), and Grub Street (food and restaurants, now part of a six-city network.)

Leitch will continue writing occasionally for Deadspin, which he says has grown into something “larger and much more immediate” under AJ Daulerio then when he ran it. The Sports Section will be more New York-centric, while that mission-critical coverage of Rick Ankiel and Chris Carpenter
is more Deadspin. Still, Leitch told me, “We won’t limit ourselves.” He’s been writing for the mag and online since joining New York as a contributing editor last year, but wanted to add another dimension: “I felt like I could contribute more but was not interested in doing Deadspin East.” A permanent Midwesterner even after a decade in New York, Leitch just finished an as-yet-untitled book about taking his dad to a three-game Cubs-Cards series at Wrigley Field. Luckily for him (and for NYMag.com), DeLessio, his partner in crime, is from Queens.

Menupages, which was founded in 2002, now offers restaurant and take-out menus for eight major U.S. cities: New York to Boston, Chicago, Los Angeles, the Miami region, Philadelphia, San Francisco, and Washington, D.C.

This buy continues the transformation of NYMag.com, which until its relaunch earlier this year, was a somewhat-sleepy site offering random NYC information and news, besides the magazine’s content. It has since morphed itself into a thriving hub of online info, news and gossip, along with video, blogs, pictures and a lot more. NYM refused comment on the story.