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RSS: Feed Me the Money

Technophiles have taken to pulling their content in via RSS or Atom feeds, two XML-based syndication formats. Feed readers grab it in a text-only format, letting subscribers read the headline and in some cases the lead paragraph as soon as it's published. Sans ads.

Early on, most feeds came from bloggers who wrote to express themselves or to raise their profiles and get speaking or book gigs. Now, publications including the New York Times and Wall Street Journal make at least their headlines available as feeds.

Both sides grapple with the issue of how to make money from feeds. There are the bloggers who may write for love and would love some money. Advertising networks have opened up contextual advertising on their blog pages; now, they'd like to glean a bit more revenue from their text feeds.

Dick Costolo, CEO of FeedBurner, a company that provides syndication services for content providers, said the demand for ad support runs the gamut of publishers, although their requirements are different.

"Commercial publishers need to understand how to have much better demographic information about who their subscribers are," he said. "The hobbyists are happy to make whatever they can off the blog -- and double that in the feed. The more serious bloggers are in the middle, trying to figure out the best way to monetize the feed."

With new software and ad services coming up to speed, bloggers shouldn't have to work specifically on monetizing feeds, said Andrew Anker, executive vice president of Six Apart, provider of blogging software and hosted bloggers' services.

"We don't see HTML and RSS as anything other than two instances of the content you create on your blog. The wonderful thing about blog software is it separates content from presentation."

The RSS/Atom feed business model won't look that different, according to David Hornik, a partner in venture firm August Capital, which has invested in blog-search service Technorati.

"The broad spectrum of opportunities to make money in the content business on the Web today will apply to RSS businesses ultimately," he said.

Hornik thinks that contextual advertising will be especially important as an ad model for feeds, because those that come from blogs tend to be about discrete topics.

While the audiences may be different, Anker said, "Ads in your HTML vs. ads in feeds vs. what you might do on a cell phone or other device -- it's all the same thing."

In fact, Kanoodle, an online ad network that's been serving ads into blogs and feeds since the summer, treats them no differently from online publications.

"A blog about pets and Cat Fancy magazine online are both completely contextually relevant [for advertisers]," said Kanoodle president Lance Podell. "We look at [feeds] the same as the rest of our contextual work."

Traditional Web publishers are experiencing a new kind of disintermediation: the inability to insert ads between content and readers.

Those publishers with their own advertising bases must insert ads back into their feeds to maintain their businesses, said Paul Kedrosky, a fellow at U.C. San Diego's William J. von Liebig Center for Entrepreneurism and Technology Advancement. He said more advanced feed readers will help ad networks and publishers track ad views and responses.

"You'll be able to track and charge different rates for RSS ads based on who [the feed] is going to and how closely you can target the message. It will not be that much different from what you're already doing," he said.

Which is not to say there won't be some twists. PubSub, a company that lets people subscribe to receive fresh content that matches search-like queries, will insert ads into those feeds. But the company has plans for new ways to make money from feeds.

CTO Bob Wyman said PubSub already is charging companies for private data feeds, such as for very particular kinds of searches or for results restricted to certain users. Next, it plans to provide feeds that treat ads like content.

"Once we've worked out all the technologies for creating feeds, distributing them, finding them, and telling people when a feed has been updated, what we do next is start dealing with things other than text, like job postings, offers to sell, or current weather and earthquake reports," Wyman said. "We'll be treating ads just like content. It will cause a drastic change in the way the system works."

For example, people wanting to rent an apartment won't have to camp out in front of the newspaper office to get a jump on the morning edition's listings, he said. "You'll know the minute the person hits the return key and publishes the ad.

"The really big opportunity to monetize RSS/Atom isn't going to come from advertising in blogs," Wyman continued. "It is going to come from the indirect effect of creating a whole new way for businesses to publish information and communicate with their customers."