RSS business model: value added content distribution

A few months ago, I had lunch with a senior associate at Highland Capital Partners. He asked me what I thought the business model was in RSS and other XML-based syndication technologies. I was able to come up with a few off the cuff, most revolving around the fact that RSS is a new information distribution channel, and one that, like email and the Web, opens up new definitions of what information is and how you receive it.

The proof of that business model came in the last week, with new aggregator products from Consenda and the apparent acquisition of Bloglines by

Consenda’s NewsPoint appears to offer newspapers a chance to grab a piece of the RSS ads market. By providing the newspaper’s readers with an easy to use newsreader that already subscribes to the newspaper’s RSS feeds, including the classified feeds, Consenda gives the readers access to the RSS value proposition, and gives the newspaper a flanking defense against services like Craigslist which threaten to disembowel their classified ads business. The success of the model, of course, will lie in whether Consenda is successful enough in adding additional value to the basic RSS aggregator offering and lowering the barrier to entry enough to convince people to keep using their aggregator.

The Bloglines/AskJeeves story is more interesting. Here the value add of Bloglines over just spidering web content appears to be their existing structured database of blog content—at least according to Mary Hodder at Napsterization. The value add that Bloglines brings to the table comes from the fact that it’s a centralized service with a database driven by the users’ preferences. Bloglines’ Top Blogs and Most Popular Blog Links (both of which the new Ask Jeeves blog links to) are made possible by the centralization of this service, and serve as a filtering mechanism for the Bloglines users. So you could argue that the main business function that Bloglines serves is a kind of automated editorial function—where editorial means content selection and promotion, though in this case the mechanisms that govern the content selection are entirely user driven.

So this gives two RSS business models so far:

  1. Enablement: Build a better/easier/faster aggregator and the world will beat a path to your door. This is the traditional Microsoft model—it’s a platform play. This is also the space in which NetNewsWire, RSS Bandit, Radio Userland, etc. are currently operating.
  2. Content discovery: Add value by reducing noise and bringing interesting content out of the blogosphere for the reader. This is the business model that is shown through the Bloglines functions I mentioned above.

There are more value propositions to be had from RSS, of course; enough that I’ll spend some more time this week blogging them.