by Eli Hoffmann, Editor In Chief
On Friday, I sent the letter below to all 7,000 SA contributors. In it, I explain why we're shifting our contributor incentive system from one that's based solely on popularity to one that rewards high-quality contributions. I am sharing this letter with you because I believe it captures our core philosophy, and why we care deeply about the quality of investing analysis we bring to you.
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Here's the letter:
In April, we paid contributors $266,000 for exclusive content. We remain committed to growing that number: in June, we expect to pay $275,000 in contributor payments, and my aspiration is that by year-end we will exceed $350,000/month.
In this email, I want to discuss some of the changes we’re making to accomplish this, including an important shift in the system we use to allocate payments to contributors.
Starting June 1, we will cease paying for mobile pageviews. Instead, we will take that money and use it to reward contributors who produce high-quality investment analysis.
Why are we shifting payments from mobile pageviews toward article quality rewards?
Contributors have consistently asked that we incentivize quality along with popularity, and that we level the playing field for those who like to write about smaller stocks and less-popular themes, where alpha opportunities are more common.
I think they’re right. Our payment system must ensure that our strongest contributors, who invest immense time and effort in order to bring high-quality investment analysis to our core audience, earn the most money and get the most exposure. A payment system that solely rewards pageviews, which reflect popularity but not investment value, is not a good long-term solution.
I will discuss the specifics of article quality rewards in a moment. But first, why are we ceasing to pay for mobile pageviews?
The rationale behind paying for pageviews has always been to share our financial success with our contributors. We remain committed to that vision. But it doesn’t apply to mobile today. We don’t display ads in mobile apps and on our mobile website for phones, and we don’t think currently-popular approaches to mobile monetization are user-friendly.
We’re confident that we will work out how to monetize mobile use in a way that’s consistent with our core principles. When we do successfully monetize mobile, we will need to assess whether per-pageview payments for mobile pageviews should be the same as for web pageviews, or less than, or more than - or even if per pageview payments still make sense. Note that we do display ads on web pages viewed on tablets and other larger mobile devices, so we’ll continue to share that revenue with contributors.
How much cash are we talking about, and how do we plan to reallocate that cash to reward high-quality contributors? In April, our most recent full month, mobile pageviews contributed $67,000 to overall contributor payments. We’re adding to the pot, and in June, we plan to pay out at least $75,000 in article quality rewards.
In order to achieve that, we’re boosting payments for Alpha-Rich articles, and introducing two new categories of article quality rewards:
1) Payments for Alpha-Rich articles will increase to $500 from $300. Alpha-Rich articles are convincing long and short ideas with asymmetric risk/reward.
2) Articles selected as a Small-Cap Insight will receive a minimum payment of $150. Small-Cap Insights are high-quality analyses of small-cap stocks that otherwise lack strong coverage.
3) Articles selected as an Outstanding Insight will receive a flexible cash bonus in addition to pageview or minimum guaranteed payments.
I’m very excited about these changes, which I believe better align us with our long-term growth vision. We want Seeking Alpha to be the No.1 platform for market-moving long and short ideas (Alpha-Rich), the No.1 platform for high-quality research of small- and mid-cap stocks (Small-Cap Insight), and the No.1 platform for all superb financial analysis (Outstanding Insight). The common thread is that the changes we’re making - and there are more to come - are designed to increase payments and shift the balance toward high-quality analysis.
We think Seeking Alpha has the opportunity to be the next-generation equity research platform, powered by smart investors with real skin in the game. We call this “opportunity-driven research,” and we think it’s qualitatively superior to the coverage-driven research sell-side banks and other research providers produce. Becoming the next-generation equity research platform is a massive opportunity that we’re confident will result in tremendous value generation for our readers and thus lucrative monetization opportunities. SA Pro (http://seekingalpha.com/dashboard/pro) is an early example of an opportunity we’re already exploring. There are others we’re in the process of roadmapping, and likely others we haven’t even thought of yet. As these opportunities become reality, we are fully committed to sharing them with our contributors.
The journey to getting there requires commitment. It looks like this: i) Raise the quality of investment analysis to increase the value delivered to sophisticated investors. ii) Raise investors’ willingness to pay for high-value investment content. iii) Raise the value we deliver to contributors.
Note that we’re bootstrapping step i) by incentivizing high-quality content ahead of achieving monetization. We’re happy to do this, because we believe it will make us and you more successful. But also note that more lucrative opportunities are likely to emerge once we achieve success in non-ad-dependent monetization.
While removing mobile pageviews will result in a temporary shrinkage for contributors who are successfully monetizing pageviews, it bears noting that our web pageview growth remains outstanding. We expect the gap to be filled quickly. The long-term trajectory for pageview-based incentives looks very healthy: Q1 non-mobile pageviews were up 30% over Q4; we recently crossed 1 million real-time email alert subscribers; and we’re adding about 90,000 new alert subscribers each month.
I recognize that change always bears an element of uncertainty. We believe these changes are fully consistent with our long-term vision for growth and delivering value to our users, and that they will result in vastly superior long-term success for us and for you.
As always, you can reach me at email@example.com.
Editor In Chief