Mar 7, 2013 · 8 minutes

The publishing industry has changed immeasurably in the last decade, and its massive transformation can be summed up in one question... “How much is a piece of content worth?”

This complex question was brought into the national dialogue very recently when noted journalist Nate Thayer wrote a scathing condemnation of an editor for The Atlantic who dared ask him to contribute for free.

Thayer’s frustration has become a rallying cry for many freelance journalists who feel that their work is undervalued. He claims he was once offered $125,000 to write six articles a year. So, when a new editor offered him zero dollars to write, he was quite upset. [Note: an earlier version of this story cited his rate at $500/article, though he has no official market rate].

In fairness, Nate Thayer is an exceptional journalist -- he has risked his life to cover Cambodia, and not a lot of people can say that they have risked their lives for anything. If we live in a world where people like Nate can’t exist to cover wars, corruption, etc, then the world will be worse.

But, at the end of the day, publishing is a business. As I’ve said many times, it needs to be treated like one, and so Nate Thayer has a right to understand how digital publishing interacts with revenue.

To be clear, I do not claim to be the world authority on Editorial, Advertising, or Tech — but I am a self-anointed authority on how those three things come together. And so... here is my answer to Nate Thayer (and everyone else) as we ponder the question “how much is my piece of content worth?”

There are three major ways in which an individual piece of content can contribute to the revenue of its digital publisher:

1. Contributing to Measured Reach and Brand Efficacy

A digital publisher begins its existence by trying to grow unique visitors as fast as it can, in order to cross “the line.”

What is “the line”?

Specifically, it is the minimum number of unique visitors (as measured by ComScore) that a website must achieve each month in order to be viable in the eyes of major brand advertising agencies.

And every website has a line that they must cross.

For niche categories like Fashion, the line may be relatively low — just 1 or 2 million visitors. For larger categories, the line is harder to achieve.

At Bleacher Report, we found the line to be about three million unique visitors. Once we reached that point, we hired our VP of Sales, and our revenue increased significantly. Several agencies with which we spoke were comfortable advertising on a sports website with three million unique visitors, though some expressed that five million was more realistic.

An individual piece of content is valuable when it helps its publisher get past that line. Because if the publisher is on the wrong side of the line, then they cannot build a sales team and earn premium CPM rates. And no publishing business can thrive on third party sales.

This, of course, is terrible news for bloggers.

Very few blogs can earn the traffic necessary to cross any line. So even if a story goes viral and attracts a million visitors to the blog, it will still prove far less valuable without the context of a larger publisher who can hit that critical mass.

This is also bad for “blog networks” who can try to package multiple sites under one "umbrella" traffic number — but many advertisers still prefer to work with large individual websites. This was the great flaw in SBNation, our largest competitor who struggled to grow revenue at our pace. No individual blog in their network achieved great scale, which is why their CEO Jim Bankoff corrected course in launching TheVerge under one brand domain.

It also explains Buzz Media’s weakness and recent job cuts.

Crossing “the line” is essential. But so too is building a great brand.

Unfortunately for Nate Thayer, The Atlantic already has a great brand, so he alone will not move mountains for them. For that reason, newer publications like PandoDaily, TheVerge, or Bleacher Report can get more mileage out of "big name" contributors who can do more to advance the brand.

In fact, The Atlantic can probably do more to improve the author’s brand, not the other way around -- just ask Anne Marie Slaughter.

The great dream that many bloggers once advanced… that big publishers would give way to a decentralized "sea of blogs" was always an untenable one. Because advertising is the lifeblood of publishing, and no blog will ever be able to cross “the line.”

Not now. Not ever. It takes a lot of content to move a website past that barrier on a month-in-month-out basis.

2. Contributing eyeballs to the site

This is the easiest value to measure with regard to a piece of content. Everyone who understands the basics of advertising — heck, even a venture capitalist — knows how this equation works.

Impressions x CPM Rate = Dollars

To bring this to life, let’s use an example... A very successful article will attract 100,000 readers. If there are two impressions per page and a $1.00 CPM, then that article will generate $200. For most blogs, those rates are a best-case scenario. It would be very difficult to make a living in such a manner.

But for a successful website that has crossed “the line” and employs a strong sales force, then those rates could be much higher. Let’s say $5 CPM’s: An article for such a site might be worth $1,000 if it attracts 100,000 readers.

Could a tyical rate of $500 per article work in such a scenario? Probably not. Because then the publisher has a "gross margin" of about 50 percent, which will likely not be enough to pay for the rest of the operation, starting with the salesperson who will take his or her commission right off the top.

But it gets even worse for the Nate Thayers of the world.

Even if his article is published on the day of a major advertising campaign that can generate $5 CPM’s, that does not guarantee that his article will partake in that campaign. Maybe his article went live at noon, right when the advertising campaign ended. Or maybe his article pertained to a presidential election, but the advertising campaign revolved around sports.

This variable highlights exactly how many things have to go right in order for his article to generate that $5 CPM:

The article has to: (a) be a hit, (b) be on a site with great advertising salespeople, (c) run during an advertising campaign, and (d) run on a day when advertising inventory was constricted enough such that some other article would not have been able to take its place.

This quadruple-coincidence means that his story — however great its literary merit — probably won’t be worth the $500 for which he is paid. And even if it were, how can a publisher know that he will consistently generate such value?

Yes, these numbers were quasi-hypothetical. And, evidently, some people do pay him $500 per article. Who knows whether the newsroom editor cutting that check has any idea how the economics of content work — given the collapse of publishing, I’ll wager that most do not understand the relationship between ‘content’ and ‘business’.

Here’s my opinion...

I have no idea how an article can justify a $500 price tag in 99.9 percent of cases.

Is it worth it for ESPN to pay Bill Simmons more than that? Probably. He is a cultural icon. The same goes with Tom Friedman. But people like Nate Thayer are far from being household names or cultural icons, and so they have to play by the rules of economics.

And I think it is unlikely that the average piece by a quality freelance journalist is going to generate more than $500 of revenue on a consistent basis. Let alone the $5,000+ it probably needs to generate in order to contribute to a profitable overall business.

If the WSJ and NYT digital subscription model starts working for more publishers, it may change the model. But I would not count on that scaling.

3. Contributing directly to sponsorship opportunities

This is more of an exceptional case than it is a strategy for writers like Thayer. But it is real.

Assuming that a large publisher can attract large advertising clients, then they can start to create sponsored content. This is all the 'rage' in New Media as sites like BuzzFeed shine a spotlight on it. Though there is nothing particularly complicated about it.

An advertiser may want your site to create special content around a brand-relevant message, and they may be willing to pay a lot for it.

At Bleacher Report, we had a major automotive client commission a Fantasy Football series, and for that reason we were able to pay Arian Foster — one of the most famous athletes in America — to star in the content. I won’t tell you how much we paid him. But you can guess that it was more than $500.

This is a great opportunity for writers to align their efforts with that of the advertisers in a very direct manner.

And while most writers must still understand that the publisher could just use some other writer instead of them to create the sponsored content, there is usually a fair middle ground. Most publishers pay more to create sponsored content, because it just seems reasonable when it contributes to a seven-figure check.

So, in conclusion…

If you are a freelance journalist, don’t expect to get paid $500 per article. The economics of print journalism in the 1990s may have been different, but in today’s digital age, they are what they are.

It takes hundreds (if not thousands) of articles to cross “the line” each month. The typical article will directly monetize tens not hundreds of dollars worth of eyeballs. And sponsored content is still a new concept.

To be honest, Nate Thayer’s article was probably worth a lot closer to $0 than it was to $500.

And while he deserves our respect for his willingness to risk life and limb in the name of his craft...nobody — not Nate Thayer, not The Atlantic, and not I — can do a damn thing about that great leveler:

The market.

[Editor's Note: For another take on this issue, see Paul Carr's recent post, "The future of journalism: It's time to pick a side."]

[Illustration by Hallie Bateman]