Jason announced big changes at Mahalo and while certainly big, those changes marked the 4th major course correction for the company. Jason declared that paying people a percentage of Google AdSense advertising revenue failed and that Mahalo decided to withdraw their original promise to pay very low upfront rates in exchange for a cut of the ad revenue the article generated over the lifetime of the article.
Accordint to Mahalo:
“For the past year, we have experimented with a writer-compensation method that shared revenue from our pages. While the revenue sharing system seemed entrepreneurial and fair in theory, after careful examination including getting your feedback, we’ve concluded that it failed in practice.
We heard your feedback about huge variation in writer compensation that was not directly tied to quality, and about the confusing nature of Mahalo dollars. In short, the system created a happy few and a frustrated many.
So we are moving to a more traditional flat-rate payment system, with incentives based on quality and traffic.
Here’s how it will work:
1. On July 1st, Mahalo will stop revenue sharing on topic and “how to” pages, and shelve the concept of vertical and page management. Revenue sharing on Mahalo Answers will continue.
2. All Vertical Managers will be offered Guide or Senior Guide roles based on their tenure and performance as Mahalo consultants to date. Guides will receive $1,000 a month for their content and Senior Guides will receive $1,300.
3. Page Managers and Go Team members will be given the ability to apply for one of 50 new Guide positions, paying $1,000 per month.
4. All Guides will be responsible for 25 new pages, 12 hours of updating (i.e. on the GoTeam), and 10 questions or answers weekly. You will be able to do this work whenever you like so you can easily schedule it around your other writing obligations!
5. NEW FEATURE: We’re moving payments of Guides to – wait for it – weekly! The week after you perform your work you will get your PayPal payment. This was one of the most requested features from our writers and we’re thrilled that our new flat-rate system will make this easy to implement.
6. NEW FEATURE: Mahalo Dollars will be removed from page management and creation. You will not have to worry about the conversion ratio anymore! Mahalo Dollars will be limited to Mahalo Answers where folks love them and the fun stuff they can buy with them. You’ve told us that real writers wanted to be paid in real dollars and we’ve listened. No more conversions! Everyone will have 31 days to cash out their Mahalo Dollars (cash outs can occur anytime in July – no cash outs as of August 1st).
7. Mahalo Dollars will only be used in the Mahalo Store going forward. No more cashing out for real dollars (gift cards and donations will still be available).
8. NEW FEATURE: A group traffic incentive of $100 each will be shared between Guides for every month that Mahalo breaks the previous month’s traffic.
9. NEW FEATURE: A group revenue incentive of $100 each will be shared between Guides for every month that Mahalo breaks the previous month’s revenue numbers.
10. NEW FEATURE: A quality incentive will be given to a selection of pages and Guides each month based on our Community Team’s judgment.
When he founded Mahalo in 2007, in terms of searches targeted, Jason said the focus remains firmly on the most popular queries that are performed by many people, rather than trying to have a human-crafted answer for everything.
“The goal of the site is not to be a comprehensive search engine. We’re very comprehensive for the most popular search terms. After that, we give the others over to Google or Yahoo,” Calacanis said. this human element that was crucial to the early success that Ask had back when it initially became popular as an up-and-coming search engine in 1998, alongside Google. Ask’s editors would — as Mahalo editors do now — look at the most popular searches and create search results that editors hoped would be answer the information need.
Ask’s problem was scaling. Having so many editors cost money. In contrast, Google’s link-based automated approach provided good relevancy for both popular and unusual (or long-tail) queries.
Over time, the machine has reigned supreme when it comes to the major search engines. Yahoo’s human-powered directory has been buried in various ways over the years, while Microsoft once heavy-reliance on human editing of top results was long-abandoned in the technological chase after Google.
In a recent conference, the CEO of Mahalo founds that people really wanted articles, video and Q&A content, so it began to focus more strongly on that. But it also found it was playing catch-up against companies that were cranking out huge amounts of content.
Demand Media does 5,700 pieces per day; Aol 1,700 per day; Yahoo’s Associated Content at 1,500 pieces per day. All this versus Mahalo’s 1,100 pieces. The figures are all off a slide Calacanis flashed up — I don’t know the source materials for those figures, sorry.
Calacanis also pokes at the Huffington Post. After explaining he knows Arianna Huffington, has talked to her in the past, likes her — he brings up an example of the Huffington Post summarizing someone else’s news articles. He says 80% of the Huffington Post is simply rehashing of other people’s content like this.
“It’s mind blowing to me when I see the Huffington Post beating the people who are doing the original reporting,” Calacanis said.
“The one rule of working with Google is don’t make them look stupid. If you make ‘The Google’ look stupid, they’ll f- you up,”
Now Mahalo spends $100s to $1,000s on each page to ensure better content, Calacanis says. “It’s good for business if we get back to focusing on quality … we have to switch.”
Calacanis also asks the advertisers at the event not to support poor content. “You shouldn’t put your ads next to sub-par content. We will not make content unless we have an expert. Demand Media will make content if someone will take $10.”
Quality, always quality
Make content, spend whatever you want, and let Google figure out who to ranks the highest. The incessant whining about “content farms” is absurd. Isn’t wikipedia just one massive content farm, and it cost $0 to produce.
At any rate, quality is ultimately what should be coming up in search. Let the people vote, because they can’t human edit everything.
A commentato in a page said: “What you continuously pretend to ignore Jason is that your entire business model is based on finding what people are searching for, and then rank for it cheaply enough to turn on profit on page views alone. You are not adding anything new to the internet, there is no added value with Mahalo, because the stuff people are searching for already exists, much if it in the form of already high quality content. You are building for the search engines, and trying to build just enough “quality” so you have something to point to when people comment on the site”. But I do not agree entirely. It is very difficult to find practical information on Google, and if you find a place where is practical, then voila!!!. Maybe he needs to move Mahalo out of the content farm business instead of trying to change content farms.
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