How the mashup model can complement the page view model

There's a very important question you have to ask yourself as a publisher before you jump into the kind of mashup business that Dick Costolo of Feedburner envisions.  You need to consider what happens to the page view model as you lose control of your content and your readership.

The first step is probably to understand and plan for the risks.  If you lose traffic to mashups, then how do you make up for the lost revenue?  How do you estimate performance metrics that determine whether or not your model falls apart?  If you know these things, then you can impose some minimum requirements for your partners.

In this study, the model is a revenue share based on advertising.  Either the mashers carry your ads while you kick back a share, or they carry their own ads and kick back revenue to you...which ever earns more for you both.  I'm not taking into account the inevitable illegal uses of your content.  That can be curbed with the right licensing strategy and the right commercial incentives.

Here are 2 different hypothetical outcomes we can use to watch what happens to the numbers.  Scenario number one is where you dance in the mash up game and get lucky with a few good partners.  The second is a best-case scenario where everything goes well.  I'll leave it up to you to determine what the worst-case scenario looks like.

In both cases, we're talking about a fictitious publisher (mydomain.com) who has 1M uniques per month with a $30 average CPM and about $7M in revenue per year.

SCENARIO NUMBER 1: How not to lose money
In this first model, we look at the difference between what happens before and after going mashup.  The "mashups" line is the aggregate activity from that publisher's commercial mashup partners, including the revenue after sharing 30% with the mashers.

	Uniques	PVs	Visits	PPV	IMP	CPM	Share	Revenue	Rev/Year
Before:
mydomain.com	1,000,000	8,000,000	2	4	20,000,000	$30		$600,000	$7,200,000
After:
mydomain.com	766,667	6,133,333	2	4	15,333,333	$30		$460,000	$5,520,000
mashups	1,000,000	8,000,000	2	4	20,000,000	$10	30%	$140,000	$1,680,000
TOTAL	1,766,667	14,133,333			35,333,333				$7,200,000

You can see here the acceptable damage to your own page view model in order to maintain your current revenue trajectory.  If your mashers capture 1M uniques and they do, in fact, deliver on the ad model, you can afford to lose about 1/3 of your traffic and still maintain your business as is.  This should also incentivize your mashup partners, as there's a pool of $720,000/year to split based on whoever delivers the most traffic.

Did you say you needed more inventory to sell...?  Hmmm, this looks like a solution.

SCENARIO NUMBER 2: Making the most of mashup partnerships
Now, let's say that you spend a lot of time cultivating your relationship with your mashers.  Let's say that they start reaching your audience and a whole new audience with some really cool tools that bring in significant traffic.  Since their sites are so good, they're able to drive up their average CPM from $10 to $15.  And let's say that you even reward their success by giving them a larger revenue share, as much as 50%.  And since we're dreaming up the best-case scenario, we see that all this new branding and exposure actually means that your traffic stays flat instead of falling.

	Uniques	PVs	Visits	PPV	IMP	CPM	Share	Revenue	Rev/Year
mydomain.com	1,000,000	8,000,000	2	4	20,000,000	$30		$600,000	$7,200,000
mashups	4,000,000	32,000,000	2	4	80,000,000	$15	50%	$600,000	$7,200,000
TOTAL	5,000,000	40,000,000			100,000,000				$14,400,000

In this much more optimistic scenario, it turns out that you might be able to double your revenue and increase your total reach without ever lifting a finger.  That sounds fun, doesn't it?

Think of these as opportunity models rather than reality-based models.  When you're telling the CEO that you want to let other people take your content, make web sites from it and sell ads against it, you'll need some backup material to make your case for the new strategy.  Otherwise, you may be meeting with the CEO to make your case for keeping your job.

Tell your CEO that you think your competitor is about to launch a mashup program and that if you don't beat them to it, you'll never be able to regain entry into this market.  Instead you'll just watch your traffic stagnating and your ad sales team flipping out because there's no inventory to work with.  And with an online revenue cap of $7M, you'll never be able to save your print business.  That might wake up the board room.

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