Mahalo: More Spin on Search and Money

June 3, 2009

Peter Kafka’s “Jason Calacanis Tries Turning Mahalo into a Wikipedia that Pays” here provides some insight into how an entrepreneur thinks about search and content. The Mahalo search engine was a notable social approach to building an information resource. The idea, like Wikipedia before it, was to rely on humans to provide links and content. For whatever reason, that model does not seem to have the traction needed to keep traffic soaring. Mr. Kafka summarizes the two changes Mahalo has made in its approach. One tweak is for young eyes only; that is, more info on each screen. The second is to implement a Mahalo “bucks” plan. I don’t grasp the notion because I am used to paying people for their services and then doing my thing with the content. As Mr. Kafka explains the Mahalo idea, I sighed. Mr. Kafka wrote:

But now he’s hoping to get Mahalo users to do the work, Wikipedia-style, with a twist–he’ll pay them. The pitch: Calacanis will offer users the chance to “own” a results page, and split any advertising revenue the page generates, primarily via Google (GOOG) AdSense. He’ll be paying users with “Mahalo bucks,” which cash out at 75 cents on the dollar, so users are really keeping 37.5 percent of each dollar their page generates. Calacanis says some of his pages are generating up to $10,000 a year, but most will make far less. Will that be enough to encourage people to build and maintain Web pages on a piecework basis?

I will be releasing a free compilation of my series “Mysteries of Online”, information that originally was developed for talks at various venues. I have a couple of sections about monetization of online information in that 34 page PDF, which becomes available on July 1, 2009. The bottom-line is that unless an information service generates what I call a “clean stream” of revenue, the costs of marketing and administering online services can suck the life out of a useful online service. Paying for content works if the information is “must have” stuff. Examples include certain chemical information, actionable intelligence for financial services firms, and “keep us out of jail” info for a legal matter. Once that high value info is captured, then the marketing and administrative costs kick in. The editorial costs never go away. Lower value info fall prey to the cost of keeping info fresh (hence long update times for certain info) and keeping pace with new info (hence the urgent need to monetize real time info).

I am not sure where Mahalo falls on the spectrum of “must have to nice to have to everyone has”. Perhaps the approach with create lots of eyeballs which can be monetized courtesy of ad outfits. In my opinion, the new improved Mahalo has quite a few moving parts. I like the “clean stream” approach. With the Bingster and the GOOG improving their ad supported results, Mahalo may face a long, hot summer without money for lemonade.

Stephen Arnold, June 3, 2009


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