Is problogging in recession?

Barely 3 months after we saw big blog networks re-balancing their budgets, there’s another one that’s just finished brewing headed by Gawker Media‘s head-honcho himself, Nick Denton, with a self-leaked internal memo.

Denton himself published the internal memo on the Gawker blog the other day, revealing plans to chop off 19 writers across his network. What’s interesting is that aside from the lay-off, he’s also planning to hire 10 more people.

• Trim down the editorial staff assigned on less-trafficked blogs like ValleyWag, etc. Each blog has to sustain operating itself and the fastest way to get to that is to cut labor cost.
• Focus on highly-trafficked blogs that attracts the ad money. Add more people to these blogs, like Gizmodo, to ramp up more pageviews.
• Suspend paying off bonus payments (by 2009) as they eat up a lot of extra cash (something like $50,000PHP 2,934,275INR 4,237,490EUR 47,615CNY 363,915 a month!).

Denton basically admits it’s all about the recession — he’s just preparing the network for the big crunch time.

On a related note, the Pinoy-packed b5media blog network also sent out notices to all its bloggers about they pay adjustments. The whole internal memo was leaked and published by Mike Arrington on TechCrunch.

The overall gist of the pay restructure was that b5media was actually overpaying bloggers in the last 2 years because of an inaccurate metrics they’ve been using. On top of that, the new tier-based payment scheme allows for more offline bonuses instead of just traffic stats.

• Tier 1: 30,000 pageviews/month and up – $4PHP 235INR 339EUR 4CNY 29 CPM
• Tier 2: 10,000 – 29,999 pageviews/month – $100PHP 5,869INR 8,475EUR 95CNY 728 flat
• Tier 3: 5,000 – 9,999 pageviews/month – $50PHP 2,934INR 4,237EUR 48CNY 364 flat
• Tier 4: 4,999 pageviews/month or less – $25PHP 1,467INR 2,119EUR 24CNY 182 flat

There will be monthly and quarterly bonus pay as well ranging from $25PHP 1,467INR 2,119EUR 24CNY 182 – $50PHP 2,934INR 4,237EUR 48CNY 364 (b5 has always had bonus pay in the last 2 years). The top tier blogs will get a $4PHP 235INR 339EUR 4CNY 29 CPM rate which means if your blog has 50k pageviews a month, you get $200PHP 11,737INR 16,950EUR 190CNY 1,456 (50k*$4PHP 235INR 339EUR 4CNY 29/k).

Blogger pay structures have been a constant debate and this is not the first time we talked about it here (Going Pro: Network or Indie?What’s the perfect formula for blogger payouts?).

In the previous payment scheme, there’s a minimum base pay of $50PHP 2,934INR 4,237EUR 48CNY 364 depending on how long you’ve been a member of b5media. It’s something like this:

New b5media blogger: $50PHP 2,934INR 4,237EUR 48CNY 364 base + $0.75PHP 44INR 64EUR 0.71CNY 5 per 1k pageviews
A year-old b5media blogger: $100PHP 5,869INR 8,475EUR 95CNY 728 base + $0.75PHP 44INR 64EUR 0.71CNY 5 per 1k pageviews
Veteran b5media blogger: $150PHP 8,803INR 12,712EUR 143CNY 1,092-$200 base + $0.75PHP 44INR 64EUR 0.71CNY 5 per 1k pageviews

So, for a veteran blogger with 60k pageviews, one can get somewhere around $195PHP 11,444INR 16,526EUR 186CNY 1,419 – $245PHP 14,378INR 20,764EUR 233CNY 1,783 per month from the old scheme. The new scheme guarantees you at least $240PHP 14,085INR 20,340EUR 229CNY 1,747. Of course, both schemes have their bonuses as well.

However, those who will be affected are really the new bloggers. A new blogger with 3k pageviews a month now gets just $25PHP 1,467INR 2,119EUR 24CNY 182 flat. Before, it’s $52.25PHP 3,066INR 4,428EUR 50CNY 380. For a new blogger with 3 new blogs, that’s a total of $75PHP 4,401INR 6,356EUR 71CNY 546 compared to $156.75PHP 9,199INR 13,285EUR 149CNY 1,141 which is more than a 50% drop. Let’s say that the traffic stats before was wrong and that the 3k pageviews was actually just 2k. That’s still $51.50PHP 3,022INR 4,365EUR 49CNY 375 for the old and $25PHP 1,467INR 2,119EUR 24CNY 182 for the new system.

Likewise, if there are two of you on a single blog, the rates become lower. Let’s take the 60k pageviews a month with 2 bloggers as an example.

Old Pay Scale: $150PHP 8,803INR 12,712EUR 143CNY 1,092-$200 + (60k * $0.75PHP 44INR 64EUR 0.71CNY 5/k) / 2 = $172.50PHP 10,123INR 14,619EUR 164CNY 1,256 – $222.50PHP 13,058INR 18,857EUR 212CNY 1,619 each

New Pay Scale: 60k * $4.00PHP 235INR 339EUR 4CNY 29/k / 2 = $240PHP 14,085INR 20,340EUR 229CNY 1,747 / 2 = $120PHP 7,042INR 10,170EUR 114CNY 873 each

I think this is where the contention of the argument that the new pay scale is a downgrade. In essence, it becomes less attractive to join b5media now as a new blogger.

Another area of concern would be the niche of the blogs assigned to a blogger. Obviously, a showbiz blog has much higher probability to grow in traffic compared to say a gardening blog. Growing a gardening blog from zero to 30k may take a year while a showbiz blog can drive that same amount of traffic in less than 6 months. Given that both bloggers are great writers and make the same effort, the inequality of the niche/industry makes it harder for less popular niches to make the same money.

The bonus schemes may compensate for the drop in base pay but it’s just that — a bonus. It’s not going to be stable. Still, it’s way better than nothing.

My suggestion? Expand the metrics for computing the tiered payscale.

• Add RSS subscription to the equation. Some blogs will have RSS-savvy readers and they’re not counted in the pageview formula. A blog my only have 10k pageviews a month but could have as much as 500 RSS subscribers. That has got to account for something. Assuming that there’s a daily blog post, the 500 RSS subscribers can convert to 15k pageviews (500/day x 30days).
• Adjust the CPM rate for different niches. In my book, a blog on gardening with 100k pageviews is more successful than a showbiz blog with 300k pageviews. It just follows the industry’s ad pricing — business blogs charge higher CPM rates than gossip blogs.
• Offer seniority pay. Loyalty still has got to count for something. When I was working for MS, we get 1 month additional salary for every year of service. So on your 3rd year, you get 3 months additional pay. This is capped to 5 years. Consider this a Christmas bonus to your team.

At the end of the day, the company has to survive. It’s like sacrificing a few for the good of everyone. It’s just that for the last 12 months, the trend has been always pointing down instead of up. Hopefully, the day will come when a blog network announces a pay increase.