As I've discussed quite a bit recently, the economics of blogging are often tough for both bloggers and the operators of blogging businesses.

I've noted that many blogging businesses appear to have a real problem - the cost of producing content exceeds the revenue that they're able to generate from it.

So what's the solution?

Typically there's a simple answer - find amateurs and wannabes willing to work for below market rate. The problem with this, of course, is that you usually get what you pay for.

The left-leaning "news and entertainment Web site", itself no stranger to the challenges of running an online content business, has decided to get into the blogging business with the launch of Open Salon.

Billed as a "social content site" that lets users "start blogging immediately," Open Salon also lures prospective bloggers with the chance to gain exposure:

"The Open Salon home page functions like a real-time magazine cover. We spotlight the best content...In the near future, we'll begin featuring the best Open Salon content on the cover of"

In a press release with the sub-headline "Partnership with Revolution Money offers financial rewards for bloggers,"'s Editor in Chief Joan Walsh hails Open Salon as a way for its visitors to partner with

"Open Salon eliminates the gatekeepers. It makes our smart, creative audience full partners in Salon's publishing future."

The terms "financial rewards" and "full partners" however, seem to be a bit of a stretch given's business model for Open Salon - tips.

That's right. wants its smart, creative audience to become, in effect, the waiters and waitresses of the blogosphere, cranking out content in exchange for "tips" from readers.

Tips can be made in any amount ranging from $0.01 to $1,000. Or, of course, the comment "Learn to spell!" and a whopping $0.00.

As JP Rafael at The Inquisitr observes:

"Blog networks may be notorious for paying tiny percentages, but at least they’re paying something to the people who give them content."

While there's nothing inherently wrong with providing passionate individuals a free blogging platform on which they can publish content the problem in this case is that is a publicly-traded for-profit business that is clearly trying to create value for itself through Open Salon.

Just because's stock is traded on the Over the Counter Bulletin Board, has accumulated a deficit of nearly $100mn over its lifetime and is unlikely to escape "going concern disclosures" in its SEC filings does not mean that it isn't in business to make money.

Additionally, it's worth considering that itself has over the years largely abandoned a paid content model. In 2002, it decided to offer users the ability to access content that was previously available only to paid subscribers in exchange for watching an ad.

In 2007,'s advertising revenues surpassed its subscription revenues. One executive even admitted that those users watching ads choosing ads over subscriptions "have been subsidizing our premium subscribers."

At the end of Q4 2007, reported 37,300 paying subscribers. It had 84,500 in March 2005.

While subscriptions are different than tips, it's clear that has placed its bet on advertising and not paid content. As such, one might argue that's pitch of "financial rewards" for Open Salon bloggers via any paid content model is a bit disingenuous.

The most important question, of course, is - will Open Salon work?

For, it might. I'm sure there are users who will enjoy producing content and who will do so with no expectations.

For users looking to turn their efforts into money, however, Open Salon will probably be a disappointment.

In our "content just wants to be free society," I think it will be difficult for Open Salon bloggers to generate a large enough amount of tips to make their efforts "profitable."

Additionally, for most markets, I'm generally skeptical about micropayments for content - especially content made available through a "user-generated content" service like Open Social.

At the end of the day, it's clear to me that online content businesses like recognize that content is king. Unfortunately, cash is god and the producers of content are often asked to sacrifice for both.

Drama 2.0

Published 26 August, 2008 by Drama 2.0

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