Welcome to the bloggy home of Noah Brier. I'm the co-founder of Percolate and general internet tinkerer. This site is about media, culture, technology, and randomness. It's been around since 2004 (I'm pretty sure). Feel free to get in touch. Get in touch.

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It’s All Relative

This whole entry is about an insanely simple idea: Everything is relative.

That’s it.

Success is not an absolute number, rather it’s an equation based on the value you extract from an investment. Value, of course, doesn’t have a hard definition either. These ideas are not particularly easy for people to deal with.

Take this blog, for instance, I have made $0 in direct revenue: I don’t sell ads or anything else here. However, the value I’ve received as far as friendships, networking, jobs and projects more than make up for the time I’ve invested here. I’ve found that’s not particularly easy for people to understand that value can be something other than money (but I digress).

I first started thinking about this in relation to power laws (those things that look like hockey sticks laid on their side). One of the core characteristics of a power curve is it’s scale-free distribution. Essentially what this means is that no matter how much you zoom in on any part of the curve, you’re just going to see another identical curve. (This made me think about “turtles all the way down” but I digress again.)

Anyway, because of the scale-free nature we start to understand that success is relative. If you’re looking at blogs, for instance, there’s a power curve across the category and then each sub-category (say marketing) is also going to be a power curve, meaning that very few will dwarf the rest in terms of traffic or incoming links. So what’s the point of all this? Easy: It’s all relative. Indie records, for instance, aren’t successful when compared to big label affairs if you’re measuring purely on units sold. However, if the measurement is return on investment I don’t think it would be all the surprising to see indies win out (especially if you consider the fact that people don’t actually need tens of millions of dollars).

This isn’t a new idea, people have always understood ROI, however, I think we got distracted by things like platinum records. All of a sudden as a people we started to believe that success was some absolute number ($1 million is a popular one). When cost of production started to lower, however, success began to mean very different things. If I can make a video with my $200 camera and 5 hours of time that 1,000 people watch I may declare it a wild success. Major media outlets could never do that because they have a machine to run and the only way they’ve figured out to monetize it is with advertising sold per impression (CPM).

But what is a site with few visitors to do? Is it less valuable? The answer is no: It’s actually more valuable to advertisers, but less valuable to the publisher (from a purely monetary standpoint). Being able to efficiently target an audience is worth a lot of money, however, if a site or other niche property doesn’t have big numbers it may not be able to survive the CPM game. Instead of thinking about other ways to add value, however, most just end up folding. That’s sad. While I don’t have a definite answer for how to fix it (Google figured out one way, job boards are another interesting one), it’s clear that Scott Karp is right when he says page views and CPMs are suppressing online advertising.

That’s because everything is relative.

July 27, 2007