Hiring a staffer from the comments isn’t something that came out of left field for Jalopnik: in fact, the site’s editor, Matt Hardigree, more or less telegraphed his intention to start doing this in February, when he launched the new version of the site’s comment system, which is based on Gawker’s proprietary Kinja platform — a model that essentially gives every commenter their own blog where their discussions are highlighted. As Hardigree put it in a note about the redesign:

You’ll also be able to republish articles from our site (and eventually all Gawker sites) and we’ll be able to do the same. If we do republish something you created you’ll get the byline, the credit, and it’ll be clear where it came from. When we look for the next generation of writers for our site, and other sites, we’ll be looking at who does well in Kinja.

Comments as “a farm system” for a blog

Hardigree said in a blog post about Ballaban’s hiring that while Jalopnik and other Gawker sites have hired commenters to be writers before — including Ryan Tate, now a writer at Wired, who was hired (ironically) after he trashed a job ad posted by Gawker — this is the first time it has taken someone from the pool of Kinja-based commenter/bloggers. The Jalopnik editor said he was “particularly impressed with [Ballaban's] passionate Suzuki eulogy and evaluation of American cars.”

In a discussion we had with Nick Denton before the launch of the Kinja platform, the Gawker Media founder said one of his goals for the new system was to even the playing field between commenters and writers — to make it easier to highlight good content from readers, and give that the same prominence as writing from the actual staff of the network’s blogs. In a note earlier this year, he called it a “a farm system for the main Gawker teams.”

Other media outlets that have hired commenters include political blog network Daily KOS and The Atlantic, where Yoni Appelbaum was such a frequent and eloquent commenter on writer Ta-Nehisi Coates’ blog that the magazine asked him to be an occasional contributor and then eventually hired him. Coates’ blog is known for its thoughtful comments — so much so that the Atlantic writer actually thanked his commenters when he won a National Magazine Award for his writing.

Critics such as Buzzfeed writer John Herrman argue that there is little value in reader comments, and some high-profile bloggers have stopped allowing them. But blogs such as Coates’ and that of Union Square Ventures partner Fred Wilson (where at least one startup, Engagio, was born out of a discussion on his blog) show that there can be value in comments when a writer or a site takes an interest in engaging with readers. And in some cases, it can even turn into a job.

Post and thumbnail photos courtesy of Shutterstock / Tang Yan Song

It should probably come as no surprise that Gawker Media is in the latter camp, since founder Nick Denton has a penchant for zigging while others are zagging, and is more than happy to rip up much of his existing network in order to try something new. The latest new thing is the Kinja discussion platform, which Denton talked about with me last year just before it launched — describing it as the core of the Gawker empire’s future. The latest version of the platform was just rolled out to users at Jalopnik.

Every commenter now becomes a blogger

As Tim Carmody at The Verge describes in a post on the new features, the platform essentially turns every commenter into a blogger. Prior to the latest change, readers had a profile page that showed their latest contributions, but now they have what amounts to a full-fledged blog with publishing ability — complete with their own custom address at Kinja.com. And editor Matt Hardigree says that the site, and by extension other Gawker sites, will be looking at the comments as a source of content and even future hires:

“If you want, you’ll also be able to republish articles from our site (and eventually all Gawker sites) and we’ll be able to do the same. If we do republish something you created you’ll get the byline, the credit, and it’ll be clear where it came from. When we look for the next generation of writers for our site, and other sites, we’ll be looking at who does well in Kinja.”

It’s worth noting that Gawker already has a history of hiring writers from its comment section, something that the political blog network Daily Kos has also done a number of times. And it’s not just blogs: Yoni Appelbaum, a PhD candidate in history, commented so intelligently on Ta-Nehisi Coates’ posts at The Atlantic that he was eventually made a guest blogger.

Denton’s plan with Kinja isn’t just to create platforms for Gawker readers to hold forth on whatever they wish — the new system is also designed to function as a potential marketing vehicle, with advertisers and brands encouraged to participate (and possibly even sponsor) discussions that begin in the comments on a story. This is just one of a number of revenue-generating experiments that Gawker is rolling out over the next little while, Denton says.

Others also want to turn readers into bloggers

And Gawker isn’t the only new-media entity that is trying to reinvent reader contributions: The Verge, which is published by Vox Media, has turned its discussion forums into content hubs of their own, and often highlights them on the front page (Note: Vox Media founder Jim Bankoff will be speaking at our paidContent Live conference on April 17 in New York).

The question-and-answer site Quora, meanwhile, has launched something that is like an amalgam of Gawker’s approach and The Verge’s: the site recently turned its reader forums into blogs — which means that every contributor to those forums now has a blog page. And as my colleague Jeff Roberts recently described, The Huffington Post has launched a “Conversations” feature that gives popular discussion threads their own webpage.

In a sense, these efforts are just an evolution of the approach that the Huffington Post took when it first launched, which was to give almost anyone who wanted it the ability to publish a blog post. Will these new players produce anything valuable, or just a lot of sound and fury?

Images courtesy of Flickr users Jeremy King and Pew Center

Slate’s latest incarnation is as a data-driven social-media beast.  The site thinks it can use viral wizardry to spray smart writing around the internet and, at the same time, finally earn a profit from being perspicuous. The money question has become pressing because Slate, despite its years as a high-brow conversation starter, has yet to show it can survive without the largesse of a corporate mothership.

So will Slate’s third act pan out? Here’s a look at how its brain trust is approaching data, technology and the evolving ethics of advertising.

Top drawer or traffic whore? Stats and story selection

On a cold January afternoon, I met editor-in-chief of the Slate Group, Jacob Weisberg, and Slate editor David Plotz in the former’s airy corner office on Morton Street in New York’s West Village. The office has large windows and shelves of hardcovers, including Weisberg’s exposition “The Bush Tragedy.”

The men were busy. Weisberg was en route to Davos, while Plotz had ducked out from answering questions on the online discussion forum Reddit. But both wanted to make the case that Slate has what it takes to survive in the age of analytics. “We rely on data, not intuition” said Weisberg. “The big cultural change at Slate is that it’s moved from being a site driven by instinct to a site driven by evidence.”

The remark comes as a rebuttal to earlier observations that Slate relied on creaky technology even as its competitors shot by it with state-of-the-art tools. The New York Observer in 2010, for instance, talked to members of Slate’s staff and concluded that the site’s tech was “Chitty Chitty Bang Bang.”

Weisberg says those days are done and that technology is at the center of the editorial operation. He points to a new Silicon Valley-style product team and a doubling in the amount of “sideways” readers from social media in the last year as proof that Slate has gotten religion on the analytics front.

Weisberg says Nick Denton of Gawker and Jonah Peretti of BuzzFeed have been inspirations in the push for better analytics. The two viral media evangelists have shaken up publishing by using social media metrics to judge what stories to promote. (Peretti will be speaking at paidContent Live in April.)

But if Slate turns to audience activity to inform its story choice, does this also mean pandering? “We have written traffic-whorey stories here and there,” admits Plotz. But these efforts haven’t been particularly successful, he says. Instead, he credits editorial initiatives like “Bad Astronomy” (a feature for science nerds) with drawing new regular readers to Slate.

In this regard, Slate is like other high-minded publications navigating a tough, even contradictory mission. On one hand, they promise smart and independent ideas; on the other, they’re heeding social media metrics that could tug them to the lowest common denominator. While news sites like BuzzFeed cut their teeth on silly cat photos only to climb up the intellectual and media food chain, it’s unclear whether this process can work in the opposite direction.

So far, Slate appears to be threading the needle by growing its readership, while also publishing thought-provoking pieces (like this one about Palestinian versus Israeli textbooks). Slate says December 2012 unique visitors increased 33% percent from a year ago; meanwhile, comScore stats show Slate is faring well against other ideas publications. Here’s a chart that shows how they compare (note QZ and theAtlanticWire are part of the theAtlantic.com) :

Paywalls and pettifogging

The buoyant numbers are good news, of course, but do they mean Slate is finally in a position to make money? In 2010, Plotz admitted that Slate was not profitable. Like nearly every other digital publication, Slate had discovered the hard way that great writing and a loyal readership are not the same as a business plan.

Since then, many publishers have followed the lead of the New York Times and begun to charge for access to all or portions of their digital content. These so-called paywalls have gained acceptance after being a contentious issue for years — in part because an early effort by Slate to implement one in 1998 didn’t work out.

Slate recently floated the idea of a future “membership” scheme for some readers, but Weisberg is adamant it won’t involve charging for content. The topic is sensitive enough to have produced a bizarre Twitter spectacle in which Weisberg’s Mr. Fox avatar berated a respected Forbes reporter as a “pettifogger” (and worse):

@jeffbercovici Jeff, that story doesn't say that! It calls membership a "model," not a "pay model." Quit pettifogging.—
Jacob Weisberg (@jacobwe) December 14, 2012

So what exactly does the membership involve? Weisberg didn’t elaborate beyond saying it won’t be unveiled until at least the end of the year and that it will be “more akin to a public radio-type membership model — you give a contribution and in return you get benefits.”

As Slate hashes out these details behind the scenes, it’s also trying to cultivate another revenue stream, in the form of an expanded events business. These include loose mixers that let readers mingle with Slate writers; Weisberg says more than 700 people recently bought tickets for one of its “gab-fests” in Washington. Slate is also hosting small, more formal events hosted by advertisers. One example is a UBS-hosted panel at which Weisberg hosted a discussion on exports with political poohbahs.

Other media outlets have run into ethical challenges with custom events like this — most notably the Washington Post, which in 2009 proposed hosting private “salon events” at the publisher’s house for powerbrokers and journalists. It sparked a newsroom revolt, and the paper ditched the idea before it ever became a reality. Weisberg says Slate, which is independent but shares a corporate parent with the Washington Post, won’t run into similar problems because its events are all public and on the record.

All this still doesn’t answer the question of whether Slate is now profitable. Asked directly, Weisberg said he can’t say because of Sarbanes-Oxley disclosure rules that require companies like the Washington Post Co. to disclose material information through broad public channels.

Ads, yes – but not for the Church of Scientology

Digital publications these days need multiple revenue streams to survive, but their core remains advertising. And here Slate, which has recently built up its own sales force outside of the Post, and others face the same dilemma: an increasing amount of web traffic comes in through mobile devices (about 30% now, and 50% by 2014 is probably a safe bet) but ad rates are low and no one is sure what to do about that.

“I don’t think we’ve figured out anything other people haven’t,” says Weisberg. “You have a rapidly expanding audience but CPM’s that are much lower. The key is distinguishing how and when people are using different types of mobile devices.  Between tablet and mobile, those two will diverge rapidly over time. Tablet ads will become more valuable while handsets gravitate to a performance model.”

While publishers wait for the right mobile ad models to emerge, many are seizing on so-called “native advertising” as the secret to juicing ad prices. It’s debatable whether it’s really new but the basic idea is to produce ads that mimic the editorial content around it – ads that resemble nearby stories, tweets, pictures, etc. It may or not be novel, but for now it is clear that native advertising can go horribly wrong such as when the Atlantic printed a “story” about the Church of Scientology replete with gushing “reader” comments about the cult’s virtues.

Weisberg says the Atlantic tripped up by violating three principles: printing ad that confuse readers; tampering with the editorial process; and accepting an ad from someone the publication shouldn’t have done dealt with in the first place. “They are enemies of free speech, they are persecutors of journalists, they’re litigious. They’re a crazy cult who’s made life hell for journalists who’ve tried to do their job. Why do business with them at all?”

In terms of Slate’s own advertising, the publication says revenue in 2012 grew 26 percent from the previous year. Its advertisers include , most recently, Coke, Lexus and Samsung. As for the ad opportunities offered by aggregation tools like Flipboard, Weisberg is skeptical and says they are “too passive” and less useful now that “Twitter has cracked the news personalization process.”

Slate has also built a strong lineup of videos and podcasts that Weisberg says are lucrative for the site. Slate is now producing nine separate podcasts, some of which rate highly on iTunes; one episode of the show Lexicon Valley recently notched up 650,000 downloads. Slate would not disclose how much ads, which are read by show hosts, bring in but said “advertisers pay some of the highest rates in the industry” for the podcasts.

This podcast and other non-print revenue will help determine whether Slate can join an increasingly data-driven media world while still remaining an influential liberal publication. While the verdict is still out, Slate’s confidence remains high.

“We have the brain of the New York Times and the body of BuzzFeed,” said Weisberg as he prepared to dash off to Switzerland – where he would later tweet, “Wish Pussy Riot was in Davos instead of so many Russian oligarchs & kleptocrats.”

(Images by Slate and Kletr via Shutterstock)

According to the memo, which Advertising Age has published in full, the former head of Gawker’s sponsored content business — which includes the sponsored conversations that Denton launched last year as part of the network’s new Kinja discussion platform — has left Gawker to run his own digital marketing firm, and former Conde Nast ad sales manager Andrew Gorenstein is taking over:

“We’re reaching for 40 percent revenue growth this year, an acceleration from 26 percent in 2012. We had six clients spend over $1M with us last year. Andrew’s new threshold is $5M. In recognition of Andrew’s success, he is being promoted to Chief Revenue Officer, responsible for traditional advertising, our content work for clients and the exploding e-commerce business.”

Denton said last year that ecommerce would be a focus for the company — noting that it was one of the original business models for Gawker but “we didn’t have the scale then to make it work” — but his latest memo makes it clear that the network is going full steam ahead in that direction. Gawker has posted a number of job listings for what it calls “commerce specialists” for sites like Kotaku (devoted to video games) and the female-focused site Jezebel.

Gawker is looking to hire “commerce specialists”

The job listings describe the position as “a new type of service journalism” that includes “everything from posts about the cheapest deal on something our readers need to introducing them to new things they’ve never seen,” and notes that Gawker will be deriving revenue from those posts (if you’re interested in alternative methods of monetization for media, we’re going to be discussing that on a number of panels at our paidContent Live conference in New York on April 17). As the listing describes it:

“Your beat is helping readers buy things. You’ll be delivering content about products that Kotaku readers know, love, or should own. You’ll have both a daily writing assignment and the freedom to pursue your own content ideas. If you’re interested in things like deal forums, coupon codes, giving your friends product advice, and Amazon.com, you’ll use all of those as inspiration to create your own new commerce content product.”

Gawker’s move towards what might be called “commerce journalism” (a term Denton says he doesn’t like using) is just part of the broader trend within a number of digital-media entities of trying to expand their monetization methods away from the declining banner ad business. Sites like BuzzFeed and Gawker are promoting their sponsored content offerings as the solution — although some see that approach as an ethical minefield and point to examples of poor judgment like The Atlantic‘s recent widely criticized Scientology feature.

In a sense, Gawker’s move is just another variation on “native advertising,” which tries to make ad-related content look as much like a site’s traditional fare as possible. Whether the network runs into Atlantic-style problems with this new type of service journalism or advertorial remains to be seen.

This post was updated on February 15 to clarify that the term “commerce journalism” is not one that Nick Denton uses to describe what Gawker is doing with its affiliate link posts.

Thumbnail image courtesy of Shutterstock / Gl0ck

At one end of the debate are skeptics who think comment sections are cesspools of trolls and cretins. At the other end are publishers like Gawker’s Nick Denton and New York magazine who believe reader contributions should be a core part of their editorial strategy.

Are readers who look at comments worth more than regular readers?

It’s no surprise that Disqus is in the “reader comments are great” camp — after all, the company not only sells commenting tools but is also building up a second line of business dedicated to turning comments into a forum for advertisers . The service, called “Promoted Discovery,” does this by perching links to paid-for content right next to reader comments. It’s already appearing in the comment sections of sites like Mens Health and the Observer and it looks like this:

As you can see above, the tool lets a website surface its own content on the left side while selling space in the right hand “recommended for you” box. In trying to tap this market, Disqus is competing with market leader Outbrain which also helps publishers and advertisers buy and sell web traffic.

Disqus’s big pitch to advertisers is that someone who takes the time to read the reader comments of a story is likely to be passionate about the topic — and more likely to click on, buy or otherwise engage with the proposed content. In its December “report card,” Disqus claimed readers who dwell in comments are more likely to visit other pages and spend more than twice as much time on the site. Meanwhile, reader comments overall are being treated with a new seriousness due to recent studies that suggest they shape perceptions more than we thought.

Big money from “native advertising?”

Disqus is also betting its promoted content will gain traction as a form of “native advertising.” The concept, hailed by some as a magic bullet to solve falling online ad prices, involves selling ads that mimic the content around it — for instance, sponsored tweets on Twitter. In the case of Disqus, the American Express story in the above graphic is a “native” ad. The company is so confident of the concept that it’s betting that the advertising scheme will soon become the bulk of its business.

“We expect advertising revenue to grow from less than 5% in Q4 of 2012 to over 60% of our revenue by the end of this year,” said the company’s CEO, Daniel Ha, by email.

It’s an ambitious goal but can Disqus pull this off? It has a number of factors in its favor, including the presence of veteran VC and native advertising champion Fred Wilson as one of its investors. The company is also in a good position to sign up clients due to the fact that it already has access to millions of websites.

On the other hand, the company’s quest to turn reader comments into gold faces some obstacles. One is Disqus’s capacity to find relevant content. When I visited several sites using “Promoted Discovery,” the suggested stories it proposed often had nothing to do with the article I was reading. A Disqus spokesman responded by saying the product is brand new and that its capacity to propose content will improve rapidly with use and as inventory grows. This seems a fair response — it’s likely Disqus will improve with scale.

The longer term challenge to making money from content is likely to hinge on publishers’ willingness to offer a service that will take readers away from their own website. For now, though, the websites are likely to simply welcome the extra money they receive from Promoted Discovery; Disqus says the first batch of checks is going out this quarter. It will be interesting to see what type of revenue-share arrangement Disqus and other middlemen will ask going forward — a Disqus spokesman wouldn’t disclose any specifics, saying the firm’s take is “industry average.”

And, finally, Disqus’s bet that comments will be an advertising gold mine could also be affected by competition from much larger players such as Tumblr; its founder, David Karp (who is speaking at our paidContent 2013 media conference in New York on April 17), recently said the site downplayed comments in favor of “a beautiful design and no jerks.”

(Image by ollyy via Shutterstock)

The Indian sites will join Gawker’s new Spanish-language version of Gizmodo — which launched on Monday — as well as local versions of various Gawker sites that have launched in Brazil, Hungary and the United Kingdom. In some cases, as with India, the local sites are run by partners in that country, and consist of translated blog posts from the U.S. site as well as some local content created by those partners.

Gawker’s partner in Brazil — a media entity called F451 — runs native versions of four Gawker sites (Gizmodo, Kotaku, Jezebel and Jalopnik) while the company’s partner in Japan runs just a local version of Gizmodo. And in Hungary, the Gawker presence consists of a site called Cink.hu, which isn’t really a copy of any of the blog network’s other sites and is run by Laszlo Szily, who worked for Denton when the Gawker founder was a Financial Times correspondent in Hungary.

Gizmodo’s new Spanish site and the Hungarian site are new variations on the model because they aren’t based on partnerships with local operators like the Times of India — they are both owned and operated by the U.S. company, using staff who write in the other language (although both will also run translated versions of Gawker content). Some of the staff at Gizmodo’s new Spanish version are based in New York and others in Spain, a result of Gawker’s recent acquisition of a local Gawker-style site called Guanabee, whose founder now runs Gizmodo en Espanol.

Gawker wants international to be 20 percent of revenue

I asked Denton whether the company is expanding internationally because growth in the U.S. market has slowed and he said no — according to the Gawker CEO, the blog network says it expects to see 40-per-cent growth in 2013, an even faster rate than it saw in 2012, although Denton didn’t say whether that was revenue or some other metric (Update: Denton clarified to me via Twitter that he meant revenues). He also said he wants to take international revenues to 20 percent of Gawker’s sales from the 5-per-cent level they are at currently, and that international deals are much more lucrative for Gawker because the profit margins are higher,.

As for what comes next, Denton said China is the biggest hole in Gawker Media’s portfolio of international properties. The company has been trying to set something up there but hasn’t been able to find the right local partner yet, he said, and therefore it may need to publish Chinese content from somewhere outside the country if it wants to make inroads into that market.

Denton also said that the company’s new Kinja platform has been a big part of the expansion, since it allows Gawker sites to host more active conversations and discussions than the previous version — including discussions that are sponsored by advertisers. Gawker launched the new platform last year, and Denton told me in an interview at the time that the focus on discussions awas going to be a big part of the future of Gawker.

The real-estate blog Curbed and its sister food and shopping sites, Eater and Racked appear to be bucking that trend.  The sites, which are owned by Lockhart Steele, cater to local audiences looking for buildings, restaurants or sales. How has he made local pay when others like AOL’s hyper-local network, Patch, have flopped?

“It’s a little counterintuitive. We’re a local company that’s not really interested in local advertising,” says Steele, explaining that the sites’ primary sponsors are national brands with big ad budgets like Ben & Jerry’s or Absolut Vodka.

Steele says big brands use Curbed to tap into local communities of shoppers, foodies or home buyers in different regions. He cites a recent example in which Curbed threw a party in Portland on behalf of Patron Tequila. “We can activate audiences in each of these cities we’re in, and activate a real community.”

Steele says there simply isn’t enough money in local advertising – with one exception. “The one place you can sell local is real estate … It’s the only category of hyper-local that’s really flush with money.”

The Mobile Morass: it’s ok to sit on the sidelines

Publishers are watching with growing consternation as audiences are moving en masse to mobile devices but ad dollars are not. Steele admits he doesn’t know how or when the mobile riddle will be solved but says he is not concerned.

Steele says it’s unrealistic to expect readers to download a publisher’s app unless you offer “non-stop engagement like Netflix” and adds that apps “create another distracting channel that you have to worry about.” He says Curbed is content to watch the mobile experiments of companies like Conde Naste which have been more bullish about apps.

“A lot of interesting start-ups in the digital media space are sitting on the sidelines .. We’re happy  to see big guys throw around hundreds of thousands on development. We’ll keep our powder try and watch others. If someone hits on the right strategy, we’re not above copying it.” In the meantime, Curbed is content to look for niche mobile opportunities like email newsletters and monetizing the screen that launches when a reader first downloads an app.

Why blogs are beautiful & Gawker’s still got it

Steele says his favorite sites are those that use a traditional blog layout like the Awl or Andrew Sullivan. He believes in a format that lets readers “scroll down and know when they’re full,” versus busy homepages like New York magazine which Steele describes as “seizure-inducing” (though he loves NY mag’s content).

Does he still follow Nick Denton, his former mentor and boss at Gawker, where Steele was the gossip site’s longtime managing editor?

“I still think Nick is one of the most interesting people in media. When it comes to product vision in this media space … I think Nick is pushing forward some of the most interesting ideas,” he said, citing Gawker’s recent attempt to transform the idea of reader comments.

Who else? Steele calls Jim Bankoff and Vox Media the “standard bearer for the media space,” He says sites like Vox Media’s The Verge are “the most beautiful on the web” for their seamless integration of text, audio and video.

Display ads are the Future

No really. While prominent display skeptics like BuzzMedia’s Jonah Peretti claim that banners (those ads that stretch across the top and side of web pages) belong to an earlier era of web publishing, Steele disagrees. “Display advertising is the future. Part of the reason is that display is also the past – people made fun of banners when they debuted on Hotwire in 1995.”

Steele’s point is that display advertising is a staple of the internet economy that publishers and advertisers now know how to buy, use and sell. He says companies continue to see these ads as powerful opportunities to build brand image. This is different than revenue from “click-through” ads about which “no one has illusions.”

To make display advertising work, Steele says, it’s important to keep ad sales in-house. “Giving inventory to ad networks puts you in a world of spiraling CPM’s.”

New York is tech and San Francisco is media (and vice versa)

“The old idea that New York created media and San Francisco created great product is out the window,” says Steele, citing Foursquare, the popular location-based social network, which long shared a roof with Curbed. He believes both cities are pushing each other to improve media platforms and publications. But that doesn’t mean he likes them equally.

“I’m a tried and true New Yorker. If lived in San Francisco, I’d have to kill myself. Other than that it’s a great city.”

(Images by Etienne Volschenk, Kiselev Andrey Valerevich and upthebanner via Shutterstock; L. Steele image via Flickr)

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

Gawker Media and founder Nick Denton got a lot of attention earlier this year, including some from us at GigaOM, when the blog network launched a new commenting system called Kinja. At the time, Denton said he had grown dissatisfied with the state of comments — both at Gawker and on the internet in general — and wanted to reinvent them as a form of communication between a site and its users. In effect, the Gawker founder said he hoped to turn traditional publishing on its head and make comments the primary feature of a story rather than an afterthought. After a few months of operation, Denton has told the Nieman Lab that he is happy with the way the new system is working. But has he really reinvented comments?

In an interview with me just before the launch of the new platform, the Gawker founder and media gadfly said that his previous attempt to reinvent comments on the network — which awarded regular commenters points and virtual badges for good behavior, similar to the “karma points” that Slashdot gives to readers — was a failure. Why? Because it encouraged exactly the wrong kinds of commenters, he said. Instead of professional social-media users, Denton said he wanted to appeal to the actual subjects of stories, so that a critical post about someone like Dov Charney of American Apparel might see Charney himself wade into the comments. Said Denton:

It was a terrible mistake. It doesn’t work because people game it — and the people who game it are the people with time and social-media expertise, and those are not the people with information or insight.

As far as I can tell, Charney hasn’t shown up in the comments section at Gawker yet, but Andrew Phelps at Nieman Lab says there have been at least a few incidents that have come close — including a recent post at Jalopnik, in which the author of a review of the Tesla S electric sports car at the Wall Street Journal showed up to address the criticisms that Jalopnik’s editor-in-chief had. It apparently took a private Facebook message from the editor to get the WSJ writer to actually show up at the site, but at least he provided an extensive rebuttal to the Jalopnik post, and other readers weighed in with some fairly thoughtful and intelligent responses.

In an email to Phelps, Denton also provides some other examples — including one that saw Gizmodo readers do a live Q & A session with the pilot of a top-secret U.S. spy plane called the A-12, another question-and-answer session with two game developers on the gaming site Kotaku, and a post that saw Gawker writer Max Read wade into the comments to debate a reader about the relative wealth of people living in the East Hamptons, after Read criticized some lame interviews that rich people gave at a Mitt Romney fundraiser.

Has Denton reinvented comments? Not really

So is this convincing evidence of the reinvention of comments? In some ways, perhaps. It’s certainly a positive step to see writers responding to readers in the comments section of a post (although Denton has apparently outlawed the use of the term “comments”). This is something we try hard to do with every post at GigaOM, because we see those comments as an important way of interacting with — and learning from — our readers, or what journalism professor Jay Rosen likes to call “the people formerly known as the audience.” Some have dismissed comments as cesspools filled with bile and not worth their time, but we disagree, and it’s nice to see that Denton does too.

That said, however, much of the evidence that Denton provides consists of Q & A sessions with interview subjects like the game developers and the A-12 pilot — events that are very similar to the “Ask Me Anything” features that the web community Reddit does regularly, but don’t seem to work quite as well because of the way that Gawker’s system threads (or doesn’t thread) replies to comments. And is hosting the occasional question-and-answer session proof that comments have been reinvented? Not really.

There are plenty of other attempts to reimagine what a discussion platform for the web should look like: the comment platform Disqus has been rolling out enhancements and adding features, and so has competitor Livefyre, and many sites such as Talking Points Memo have chosen to go with Facebook-hosted comments (although I’ve argued that doing so is a double-edged sword). Then there are newer experiments like Branch, the New York-based startup that is trying to host invitation-only discussions, and all-in-one social comment inbox experiments like Engagio.

If there’s one thing that new media and traditional media players can agree on, it’s that comments on the internet can be an incredibly frustrating experience at the best of times, and no one really knows how to fix them. Denton should get some credit for trying (repeatedly, as Phelps’ post at Nieman Lab notes), but the real solution has yet to be found. And the only thing that seems to work in the interim — as media blogger Anil Dash has pointed out in the past — is for writers to own the comments on their stories and blog posts, instead of seeing them as an afterthought.

Post and thumbnail images courtesy of Flickr user Tony Margiocchi and Gawker Media

Gawker Media founder Nick Denton has some controversial ideas about what online media need to do, including the idea that the conversation around a story should be the primary focus rather than the story itself — as he described in a recent interview with us at his office in SoHo. In that same interview, Denton offered his thoughts on a range of other topics, such as whether we are in a technology bubble, the decline of Facebook and Twitter as conversational media, and whether he has any interest in selling his digital empire. Here are some edited excerpts of his comments on those and other subjects.

Why tech is boring now:

GigaOM: “You don’t really pay any attention to the tech scene?”

Denton: “No — the tech world is particularly obnoxious at the moment.”

GOM: “Because we are in a bubble?”

Denton: “Yeah. I do remember enjoying it more in 2003 and 2004, when it seemed as if the only people who were doing anything were the diehards.”

GOM: “You like the underdog.”

Denton: “Yeah. It’s Henry the Fifth, Shakespeare — outnumbered, brave, fearless. Going to their deaths or glory, one or the other. That has more poetry to it than a bunch of failed investment bankers that reconstitute themselves as app makers, or funders of app makers.”

———————————-

The most interesting people in tech:

GigaOM: “Who do you pay attention to when it comes to tech or online media?”

Denton: “I always watch what Evan [Williams] is doing, because I’m obsessed by Internet discussions, and how bad they are, and how much better they could be. Josh [Miller] at Branch is interesting [Branch has been funded by Williams' Obvious Corp and does hosted invitation-only discussions].

———————————–

What’s wrong with Twitter and Facebook:

GigaOM: “Aren’t social networks like Twitter and Facebook good for discussions? Isn’t that what social media is for?”

Denton: “Twitter has really become a repository for the bitterness and toxicity that used to be the defining feature of Internet comments. A lot of the disaffected wannabes and will-never-be’s have gone from Internet comments through to Twitter — and Facebook, particularly since they’ve opened up subscriptions. If the better people are on Twitter, then the dumb people are on Facebook.”

GOM: “But can’t you have a conversation on Twitter?”

Denton: “It’s not really a dialogue at all. It’s just a bunch of people shouting at each other. Twitter feels like that. There’s a bunch of people throwing one liners at each other.”

———————————–

The future of digital advertising:

GigaOM: “Gawker hasn’t really experimented with subscriptions or other models for revenue. Do you have any interest in anything other than advertising?”

Denton: “No.”

GOM: “Is that because you don’t think they will work?”

Denton: “No, it’s because I’m lazy and I like to focus on one thing at a time. I’m actually much more interested in what I would call conversational marketing. That is the advertising that I would buy. The ability to have a conversation with — not necessarily with end customers, but people online who are truly going to influence end customers. And this is probably not the social media elite.”

GOM: “But everyone us saying advertising is dead, media needs to find other revenue models. Do you disagree?”

Denton: “We do fine out of advertising. We have high quality, high income…”

GOM: “Are those ad revenues growing?”

Denton: “Yeah, of course.”

GOM: “Rapidly?”

Denton: “Pretty rapidly, yes. We’ve been profitable for years.”

GOM: “And no interest in other revenue opportunities?”

Denton: “What are we good at? We are great at publishing, and we are great and will be great at creating these special environments [for conversation.] We have the tone of the web. Editorial expertise and technology are the things that marks us out. Clients who are often trying to become publishers themselves, we should be providing them with a publishing platform, publishing services and publishing expertise and publishing consultancy.”

———————————–

Selling Gawker:

GigaOM: “What does the future of Gawker look like? Have you thought about selling?

Denton: “No. I actually haven’t been asked the selling question for a long time.”

GOM: “It’s a possibility, no?”

Denton: “No.”

GOM: “Not at all? Ever? Not even if Mark Zuckerberg called you up and offered you a billion dollars?”

Denton: “No.”

Post and thumbnail images courtesy of Flickr user Matt Haughey