Henry is proud of the fact that his RPMs (revenues per thousand pageviews) are much higher than RPMs at more generalist sites. But in an era of essentially unlimited inventory, creating vast amounts of new inventory in order to increase CPM-based revenues is not an obvious road to riches — I’ve called it “a junk-mail paradigm which benefits no one”, and no, that’s not just the view of a naive editorial-side person without business-side experience: it’s also the view of Jim Spanfeller. If your pageviews become less valuable, falling RPMs can mean lower revenues even on higher traffic.
Blodget should remind himself on a daily basis that publishers make money by selling readers, not adspace, and that if he’s going to make money, he’s going to have to do so by getting high-value readers that companies want to reach. At the moment, both Blodget and his advertisers are stuck in an increasingly out-of-date paradigm wherein pageviews serve as a proxy for readers, but today, unless you’re Demand Media or the like, that paradigm is doomed.
Traffic can be bought. Loyal reader relationships need to be earned, and that’s where stars like Carney are invaluable.”