Until now, I’ve written relatively little about Seeking Alpha as a business. But a debate has started, prompted by Barry Ritholtz, about Seeking Alpha’s model versus the goals of bloggers. So here are some thoughts on the "blogonomics" (term coined by Felix Salmon) of Seeking Alpha.
Seeking Alpha grew out of my own experience as a blogger after the bursting of the tech bubble. Typepad, Blogger and WordPress had cut the cost of web publishing to zero. By 2004, a growing number of professional and retail investors were blogging about stocks and the market. We weren’t writing to generate income as journalists; in fact, journalism as a profession was (and continues to be) under extreme financial pressure, reflected in the relentless decline of the newspaper stocks. Instead, we loved writing, loved the freedom of instantaneous publication, and loved the exchange of investment ideas. And hey, if we could promote our careers or businesses at the same time, all the better.
The biggest challenge as a blogger was the sense of disappointment when only a handful of people read your posts or left comments. By 2005, writing a blog sometimes felt like running on a treadmill: to build your audience, you needed to publish multiple interesting posts per day, and that was hard work. But while the number of blogs competing for readers’ attention grew exponentially in 2005 and 2006, traffic to the average blog wasn’t increasing in step. The audience was growing, but still wasn’t big enough.
Seeking Alpha was a vision for how to win an audience that was big enough. By “big enough”, I mean equal to the exposure professional journalists receive on mainstream financial websites - that is, tens of millions of readers.
What would it take to win that audience? Seven factors:
1. Human filtering of authors and articles. Readers need help finding the best authors. They need to know that the authors (who often prefer to remain anonymous) aren’t fraudulent and are disclosing positions in stocks they write about. And even if an author has fulfilled these criteria, filtering is required at the article level because a personal blog about stocks might contain articles about other topics. You can’t filter for quality, integrity and relevance with algorithms or auto-republishing of RSS feeds; you need human editors.
2. Comprehensive ticker coverage. There are two ways readers access financial content: they read top headlines about the biggest stories of the day, and they read articles by stock ticker, either through a “quote page” or as a list of stories under a portfolio. Access via stock ticker accounts for the clear majority of financial readers' attention. So to win a serious audience, you have to drive relentlessly for comprehensive coverage of stocks.
3. High-quality reader experience. Headlines need to be accurate and informative. Tagging by stock ticker, sector and theme needs to be accurate and not excessive. Typos, spelling and grammatical errors need to be corrected, and tickers added after company names using a consistent format.
4. Compelling complementary content. To win a really large audience, a financial website needs some form of regular news coverage to complement the opinion and analysis provided by contributors. And if you can also provide something uniquely valuable and unavailable elsewhere, you'll attract a dedicated, high-quality readership.
5. Great web site. It’s no surprise that almost every business that started as a blog had to develop its own publishing platform and website. That requires web designers, programmers, product managers, and scalable web hosting.
6. Partnerships. Large repeat audiences don’t build rapidly without partnerships. And partnerships require business development, lawyers, indemnification, and the tech resources to implement agreements.
7. Plausible business model. All this costs a ton, and it’s not worth doing if there isn’t some pathway to profitability. That means a dedicated sales force, as ad networks don’t generate enough revenue.
This is what we built with Seeking Alpha. There are about 40 of us in the company, including 16 editors and 16 people in the tech team. We publish the best free one page roundup of the financial news each morning, summaries of Barron’s, Cramer and the housing market, and about 3,000 earnings conference call transcripts per quarter. You can search for articles or transcripts by phrase or stock ticker, view comments by stock ticker on our new forums, and soon view articles by watch list or portfolio.
The combination of editorial oversight and business development allowed us to partner with Yahoo! Finance and E*Trade. Neither of them would have linked to contributor content without editorial oversight. We’re generating ad revenue, but aren’t yet profitable.
We're also not perfect. We occasionally publish articles that should have failed our quality filter, we miss typos, and sometimes our editors make mistakes with titles.
But the hard work and investment has paid off: type almost any stock ticker into Seeking Alpha (or Yahoo! Finance or E*Trade), and you'll find a variety of intelligent and thoughtful viewpoints from multiple authors. As a result, Seeking Alpha had over two million unique visitors in March (Compete understates our traffic, but is directionally accurate).
That’s what we bring to the table.
How does this look from the contributor’s perspective?
Well, if you’re a blogger, the incremental effort and investment you need to make is precisely zero. You do nothing; our editors do all the work. (They might make a mistake and mis-title your article, but they’ll answer your email immediately and fix the error if that happens.) Duplicate content problems with search? In the entire history of Seeking Alpha, we haven’t had a single contributor who reported that their traffic fell after we started selecting and republishing their articles. Our contributors retain intellectual property rights to their articles, and can pull out of Seeking Alpha at any time with a simple email.
While the marginal cost is zero, the marginal return is undoubtedly positive. Contributors get exposure to finance professionals, investors and senior executives who are able to find more about you, your money management or research business, your investment newsletter, your blog or your book.
We know about our readers from our email subscribers, and they include employees in every major investment bank, and dozens of hedge funds and mutual funds. Jim Cramer said in an interview recently that he trawls Seeking Alpha for potential hires. We’re the only finance site that devotes the left column of every article page to links and information about the author (including two graphics if authors wish), and we’re constantly thinking about ways to add value for our contributors.
Bloggers now have exposure that was unthinkable a few years ago. And instead of building audience by climbing on the treadmill of publishing multiple articles every day, they can now write thoughtful pieces when they're ready to.
Who doesn’t Seeking Alpha work for? We haven’t ruled out paying contributors in the future, but we’re not ready to do it now while we're investing in growth (which we're convinced our contributors will benefit greatly from). As a result, we never imagined we’d be attractive to bloggers who want to build media businesses, and sure enough a handful of such writers pulled out. Hopefully they’ll do well, but as more and more talented people publish free articles for exposure, career development and business leads, it gets tougher to make a living from paid content. Most of those who left still seem to be searching for a revenue model, and their exit from Seeking Alpha has had no positive effect on their traffic or income. Conversely, some of the most prominent bloggers and mainstream media publishers have recently become contributors, perhaps recognizing the brand-building potential of reaching such a large and focused audience.
Some hard numbers: The cumulative number of contributors to Seeking Alpha surpassed 1,300 in March. Fewer than ten regular contributors chose to cease publishing on Seeking Alpha during the entire first quarter. Over 100 new contributors joined each month in January, February and March.
I'll leave the last word to one of our contributors. Literally as I was writing this, Asif Suria emailed me as follows:
...after my recent article about NetSuite's software and support was published on Seeking Alpha yesterday, I was contacted by the Director of Customer Support from NetSuite to help us resolve the issues I mentioned in the article. This kind of exposure is just one of the reasons I have continued to contribute to Seeking Alpha for well over 2 years.