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Recently, Gawker Media, the blog empire run by Nick Denton, made two moves that were curious. One was spinning off three sites that weren’t making the cut: Gridskipper (travel), Idolator (music), and Wonkette (politics). The other was slashing the pay-per-page-view rate for Gawker Media writers by 33%.

In Denton’s go-ahead-and-leak-it email memo, which showed up on Silicon Alley Insider, he talks about the advertising recession and how he wanted to plan ahead by spinning off blogs that didn’t perform well or couldn’t be sold easily (Wonkette). We can assume the same thinking was behind the pay cut for writers — cut costs now before the advertising tanks.

But there’s a deeper problem for the Gawker stable of blogs: the pay-per-page-view compensation system. Back when I first wrote about the Gawker pay system, in 2005 for Online Journalism Review, there was a weird “banking” system where writers wouldn’t get their monthly bonuses if their traffic went down in a month. Now, that system seems to have evolved into a new one that has been handily explained out in the open on Valleywag:

On top of your monthly base pay, you will be eligible for a bonus based on the number of page views your posts receive each month. This total includes any page view on any story with your byline that was read during the month, even if the story is months or years old…

Each site will be assigned a page view rate, which is the dollar amount that each 1,000 pageviews on the site is worth. Although this sounds similar to an advertising CPM, this number has nothing to do with your site’s revenue or advertising value. At the end of the month, if the money you earn in page views exceeds your monthly base pay, you will be paid the extra money as a bonus.

This chart should make it clearer. If your site has a page view rate of $5:
bq. $2,000 = 400,000 views
bq. $5,000 = 1m views
bq. $7,000 = 1.4m views

But that memo also points out the real problem with this system:

For several months now, we’ve displayed the number of views each item receives. It’s not a perfect measure. The view count does not reflect attention paid to the posts on the front page; nor photo galleries (which are usually junk views anyhow); and it can overstate the value of cheap items with superficial appeal, but which damage a site’s reputation. Nevertheless, it’s the best measure we have, so we’re going to use it to calculate bonuses.

I added the emphasis on those last two lines because they are key. Paying a blogger or journalist based on page views puts the onus on the writer to get traffic and takes away from their main job of research and writing. Yes, we as freelance journalists should create work that has an audience, that people want to read, that resonates with the public. But there’s only one result of paying writers by page view: They will pander, sensationalize and go for short-term gain over long-term value. And it does damage the site’s reputation.

A Loyalty Index

Of course, we’re talking about Gawker blogs that feed on gossip and sensationalism, so it’s not surprising they would pander for page views by offering up sex and celebs at every turn. But there’s a problem with the ratings uber alles mentality that actually mirrors the same attitude in the mainstream media: The audience must grow, or else! Ratings, ratings, ratings.

Anyone who plays the stock market knows that companies can’t simply be profitable to do well on Wall Street; they have to grow profits every single quarter. And the quarter they drop in profit growth is the quarter the stock nosedives. Why do writers have to live in that bottom-line-only world? Isn’t there value in developing a writer’s craft, helping build a loyal audience that comes back time and time again?

I believe that a blog with 50,000 loyal, repeat visitors is much more valuable to the publisher, advertisers — everyone on the business side — than a blog that has sensational posts that bring in 100,000 one-time visitors for entertainment snacks who are then gone the next moment. You hear everyone talking about the Long Tail, the ability to serve niches online, and the importance of audience engagement and time spent on a site more than sheer page views and traffic per month.

Nick Denton is an old media dog dressed up in new media clothes. He yearns for massive traffic, and obsesses about Gawker blogs’ daily and monthly page views on his personal blog. Not once do you hear him talk about a niche audience, about the need to build community around his blogs, about the chance to create real connection between his writers and readers. Instead, you end up with angered writers leaving or calling their workplace a “sweatshop” right there on the blog, as Jordan Golson did on Valleywag recently.

So what is the right way to compensate writers on a commercial blog or online news operation? Popularity can and should have a role in compensation — but not the only role. I had talked to someone at CBSSports.com who said they were working on a different way of judging the work of their columnists, creating something called a “Loyalty Index.” While I haven’t seen the details of that plan, I do endorse the idea of giving writers credit for doing the following:

> Getting a large audience base that returns to the site regularly.

> Breaking news or writing original ideas — not just linking to others’ work — that becomes a broader meme in the blogosphere, creating buzz outside the main site.

> Getting people to post in comments or become part of the forums or community.

> Having people sign up for the RSS feed for the column or blog.

> Creating a way for their readers to become part of the feedback loop, either through a Facebook group, email list, or Twitter posse.

There are many ways that a writer could game the system for page views, but it would be a lot more difficult for them to game a loyalty index. And in the end, sales folks and advertisers — and most important, readers — would be more willing to stick by such a writer’s work in the event of a recession.

What do you think? Should bloggers and journalists be paid according to page views, a loyalty index, or the old pay-per-word method? Do you think Gawker Media is making the right moves? Share your thoughts in the comments below.

UPDATE: Perhaps unsurprisingly, Valleywag recently fired writer Jordan Golson, the one who had complained — on the blog — about the recent pay cut. Golson told TechCrunch that he doesn’t think that post was the sole reason he was fired, but might have contributed to it along with a “lack of enthusiasm” after getting his pay cut.

UPDATE 2: I’ve done a follow-up post on this subject, “CBS Considers ‘Loyalty Index’ Over Pay for Page Views,” including a mini-Q&A with CBSSports.com and CBSNews.com general manager Jason Kint. Kint says they are still developing an index of some sort that looks at repeat unique visitors for columnists as well as people reading through RSS feeds and other platforms.

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