Why is Seeking Alpha paying its contributors?

By Felix Salmon
January 16, 2011

Seeking Alpha has finally started paying its contributors — but I’m not convinced that this is a welcome development.

CEO David Jackson announced “three new initiatives” this morning: revenue sharing, a new leaderboard system, and access to statistics. The big news is the first one, which goes by the name of the Premium Partnership Program:

We can now share meaningful revenue with contributors: You’ll earn $10 for every thousand page views to articles which are published by Seeking Alpha and given to us exclusively (i.e. they don’t appear for free elsewhere on the Web).

Elsewhere, in the FAQ, we’re told that “top articles garner 10s of thousands of pageviews, so if you’re writing compelling articles, the potential to earn significant income is very real”.

I don’t think this can really be taken at face value. Seeking Alpha’s contributors are sophisticated financial investors and professionals: their idea of “significant income” is likely to be at least a couple of thousand dollars a month or so. But the chances of them getting anywhere near that are very slim indeed.

Thanks to the new stats, I can now see just how many pageviews I’m getting on Seeking Alpha: over the past year, I’ve ranged from a low of 30,589 in November to a high of 68,390 in May. On average, I’ve been getting just under 48,000 pageviews per month. Which means that if I gave every single one of my blog entries to Seeking Alpha exclusively, then I’d still be earning on average less than $500 a month. And I’m a full-time blogger, unlike most Seeking Alpha contributors.

If I contributed only some of articles for exclusive status, of course, my income would be much lower. Over the past year, exactly one of my posts — this one, on Warren Buffett — generated more than 10,000 pageviews. Put that single entry aside, and a very successful post for any given Seeking Alpha contributor looks as though it generates 4,000 pageviews or so — enough for a whopping $40 check.

And I’m near the very top of the Seeking Alpha contributor list. As part of the revamp they got rid of the “SA 100″, their list of Seeking Alpha contributors with the most followers. My 59,027 followers were enough to put me in tenth place on the list; top place went to Roger Nusbaum, with 84,758.

Jackson says that the revamped leaderboard is a function of the fact that “the number of followers a person has on Seeking Alpha doesn’t necessarily equate to reader engagement or influence”, and that “in contrast, the number of people who read your articles is a direct measure of reader engagement and thus your influence”. But the new leaderboard nowhere lists the top contributors by overall pageviews, instead listing only the most-read authors in narrow fields like “IPO Analysis” or “Dividend ETFs”. I doubt that many if any of those kind of posts result in over 10,000 pageviews.

Meanwhile, Jackson’s letter and the FAQ both leave out the most important part of the new system. To find that, you need to carefully read the terms and conditions:

By indicating an article is Premium when you submit it to the Seeking Alpha Premium Partner Program you agree to make Seeking Alpha Ltd your exclusive publisher for that article should it be accepted to the Premium Partners Program and you are granting a worldwide, irrevocable, perpetual, transferable, fully-paid up (subject to required payments hereunder), exclusive license to make any use of the articles and the derivative works of the article, to publish it and make it available it in any way it wishes, and to generate income from it.

In other words, Seeking Alpha here isn’t really paying per pageview at all. (If it were, it would pay contributors of all articles, not just exclusive articles.) What’s really happening is that Seeking Alpha is buying premium content, at zero up-front cost, which it can then resell in any way it likes and for as much money as it likes, with none of those revenues being shared with the author.

This is reminiscent of the evil goings-on at Forbes. I can easily imagine that Forbes magazine, or Forbes.com, or any number of other media outlets, might be interested in republishing the most popular content on Seeking Alpha. But up until now, Seeking Alpha hasn’t had the right to sell or license their content. With this new program, they can do just that, and keep all of the proceeds for themselves.

I don’t have access to Seeking Alpha’s internal metrics, but my guess is that on average they’re ultimately going to be paying roughly $10 per article for this premium content — that’s on a par with what content farms like Demand Media pay, but Seeking Alpha’s material, of course, is much higher quality.

I’m very suspicious, then, of what Seeking Alpha is doing here, and whether it’s really being transparent and honest. Jackson told Joseph Tartakoff that an average entry on Seeking Alpha gets between 3,000 and 4,000 page views, but I simply can’t believe that’s true:  Seeking Alpha published about 600 of my articles between February and December of 2010, which generated about 500,000 pageviews in total. That averages out to less than 1,000 pageviews per article, despite the fact that I have over 50,000 Seeking Alpha users following me. (It’ll be fascinating to see whether they publish this one, and if so how many pageviews it ends up getting.)

In any case, my advice to anybody thinking of taking part in this new Seeking Alpha program is to just say no. So long as you stay outside the program and retain the copyright to your material, you can sell it or repurpose it or do anything you like with it. The minute you contribute a piece under Seeking Alpha’s “premium” terms and conditions, however, you lose all rights to it whatsoever — note the word “exclusive” in the agreement. I’ve sold magazine pieces for thousands of dollars where I haven’t given up exclusive rights. You should never give up exclusive rights for a pathetic payment of $10 or so.

Update: Jackson responds in the comments, calling this “a bit of a crazy conspiracy theory”, saying that SA has “no content syndication business”, and adding that if such a business were to emerge, then “we’d share those income streams with the contributors”. He also implies that since my posts “typically aren’t actionable”, they’re likely to get fewer pageviews than most. I’ll believe that — and the idea that the program “will likely put some highly talented people in full-time business” — when I see anybody else’s figures, or when I see an overall pageview league table.

Jackson’s comment raises more questions than it answers, however. If SA isn’t in the content syndication business, then why is it insisting on being granted “a worldwide, irrevocable, perpetual, transferable, exclusive license” to the work before paying $10 per thousand pageviews? And why indeed is it insisting on exclusivity at all? By doing so, SA is forcing its contributors to make a hard decision: earn money from their posts, or have a full archive of their work available on their own site. If you want the latter, you can’t have the former.

Seeking Alpha is in the business of helping its contributors make financial decisions, which makes Jackson’s follow-up comment even odder: he says he didn’t publish this post on SA because it “isn’t in any way actionable”. Of course it is: it helps SA contributors decide whether or not to take Jackson up on his offer. It’s arguably the most actionable thing I’ve ever written for the SA audience. My guess is that Jackson just doesn’t want to give any publicity at all to the small print he inserted into the terms and conditions.

Update 2: Since posting this, I’ve heard from a few other Seeking Alpha publishers, all of whom have total pageview counts roughly in line with my own. One of them was Barry Graubart of Alacra Pulse Check, who posted his own analysis of the news here, and whose content is very much “actionable”. He got 186,654 pageviews from 58 posts over the past 90 days: if he gave all of his posts exclusively to SA, that would work out at a monthly income of $631. What’s more, just one of his posts — “10 High Dividend Stocks for 2011″ — accounted for 36,353 pageviews, or roughly 20% of the total. You can see why Josh Brown reckons that under SA’s new model, we should “expect a tidal wave of ’7 Stocks for an Election Year’-type schlock”.

More interestingly, Seeking Alpha has taken the meat of my criticism to heart, and have edited their terms and conditions. They now read as follows:

By indicating an article is Premium when you submit it to the Seeking Alpha Premium Partner Program you agree to make Seeking Alpha Ltd your exclusive publisher for that article should it be accepted to the Premium Partners Program and you are granting a worldwide, irrevocable, perpetual, transferable, fully-paid up (subject to required payments hereunder), exclusive license to make any use of the articles and the derivative works of the article, for free use on a website.

They’ve added the qualifier “for free use on a website”, and subtracted “to publish it and make it available it in any way it wishes, and to generate income from it”. Those are substantive changes, which address most of my ethical issues with the scheme. I still think it’s invidious to ask people to stop publishing their own material if they want to make money from Seeking Alpha; I would be much happier if they allowed that material to be published with some kind of time delay.

But I can see two reasons why they’ve gone down this route. The first is that most of their contributors — people like me and Barry, or successful fund managers — won’t take them up on their exclusivity offer, and therefore they won’t need to pay us. And the second is that this is an SEO play: they reckon that they’ll do better in Google searches if they have their content exclusively.

This is a dangerous path to take for Seeking Alpha. The “premium” contributors will learn fast to write listicles and other link-bait if they want to make decent money, the overall quality of the site will therefore decline, and the smart content will become harder to find. Is that a price worth paying, for added pageviews? I think not, but Jackson clearly thinks otherwise.

Update 3: Seeking Alpha’s Eli Hoffmann leaves a detailed comment below, saying much more than David Jackson has about the program and the thinking behind it. It’s well worth reading the whole thing, but here’s the bit where he tries to explain why SA is asking for exclusivity:

Why ask for exclusivity? None of us knows how all of this plays out, but we’ve put an offer out there for our contributors that we hope will resonate with many of them: Park your financial identity on SA. Help us make this the most awesome investing site on the free web, and we’ll make sure you share in our success.

I’m not sure that Seeking Alpha is the place that anybody would want to park their financial identity, given that it has layers of editing that people often dislike,  that the degree of information that people can give about themselves is limited, and that all SA pages will always promote SA first and contributors second. But we’ll see, I guess.

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