Henry Blodget image via China Divide

Business Insider announced earlier this week that it had raised a fresh $7 million in venture funding from the likes of IVP and RRE. The site earned investor's capital by showing impressive growth in terms of both unique visitors and pageviews, even booking a small profit. But a pair of posts from late last night questioned the methods by which the site achieves this enviable traffic.

The first came from Ryan McCarthy over at Reuters entitled: "Business Insider, Over-Aggregation, and the Mad Grab for Traffic". It points out that BI frequently takes all the salient facts from a story, adds little to no original reporting, and offers not much beyond a small link in return. It's the classic argument made against the Huffington Post, that the site is more a of parasite than a publisher.

The piece inspired Marco Arment, whose blog posts are regularly regurgitated on Business Insider, to weigh in.

Why wouldn’t I want to be associated with Business Insider? It has nearly everything that offends me as a web reader and writer: linkbait headlines, more ads than content, more sharing buttons than original words, top-list “slideshows” that make readers click for every item and defraud advertisers into thinking that their pageviews are legitimate, Tynt messing with copy and paste, Vibrant Media’s double-green-underline ads, generic images slapped next to each post (often poorly Photoshopped®), and tabloid coverage of every rumor and inflammatory non-event so they can fight all of the other tabloids for Google’s pennies.

Mr. Arment goes on to point out that the traditional counter-argument, that Business Insider's pick-ups helps promote his work and send traffic his way, rings false. Running the numbers, he found that over the years, with all the articles BI had scraped, and the huge audience it supposedly commands, it has sent less traffic to him than his wife's personal website, under 10,000 visitors in total.

Having worked at Business Insider, I was surprised Mr. Arment let this continue. The policy while I was there had been to ask for permission before reposting blogs. Turns out they had:

Business Insider once asked me if they could “syndicate” all of my blog posts automatically and give me an official byline on their site in exchange for — you guessed it — links back to the articles on my site.¹ I politely declined, because they’ve effectively done this for years without my consent, and it’s not doing me any favors.

I wonder if they’ll reprint this one. UPDATE: Indeed they did

Business Insider’s mass replication of my writing is the only downside that has ever made me reconsider my Creative Commons license. If they’ve had any beneficial effect whatsoever, I haven’t noticed.

Business Insider certainly breaks its fair share of big stories, beating us to scoops on the NYC tech scene. It also offers up some smart analysis on technology and the markets. Its SEO is unparalleled, to the point where you will often find their stories as the top search result on a big story they aggregated less than 12 hours after the story has broken.

But as McCarthy and Arment point out, you can't achieve this kind of growth without skirting some ethical lines. Since leaving Business Insider and founding Betabeat, I've come to think of them as a competitor and like to engage in some friendly sparring on Twitter. But certain things have occurred on the editorial side that cross the line.

After Betabeat's Nitasha Tiku wrote a long, well reported piece on the technical troubles inside Conde Nast, Business Insider responded the next day with their own post. In a section intended to disprove some of Ms. Tiku's writing, they lifted an entire quote word for word and credited it to their own anonymous source.

When we brought it to their attention, deputy editor Nicholas Carlson apologized and said it was simply a mistake. Considering the speed they are working at, that's possible, but it doesn't change the fact that it was outright plagiarism. UPDATE: Mr. Carlson called in to say that the error was his, not his writer's. He was rushed and accidentally removed the attribution to our post and attributed the quote to their own source. This is known as unintentional plagiarism.

The end game for big news sites like BI has traditionally been an acquisition by AOL (TechCrunch, HuffPo) or perhaps an IPO (Demand Media). Mr. Blodget likes to crow that his site is profitable, but he certainly never claimed it was making anywhere near enough money to satisfy the returns expected by venture capital investors.

Perhaps with this additional funding Business Insider can devote more resources to original reporting and bring on more editors to ensure the massive amounts of content they are producing at high speed stays within the rules of acceptable journalism. But nothing they have done to this point indicates that's part of the plan.

These are not the blogger you're looking for

It's not a million dollar round on the first day of class, but Contently.com, which just joined the second class of TechStars NY, has raised a $335,000 debt round from Founder Collective.

The start-up has positioned itself as the anti-content farm, helping freelance journalists to manage their careers and big brands to produce editorial content that stands out, all while avoiding the SEO optimized schlock pumped out by Demand Media and others.

Speaking from personal experience, there isn't much money in making freelance journalists your clients. But connecting professional writers with big brands looking for some high class advertorial could be a strong play. A corporation can afford to pay premium freelance rates, since they are chasing pageviews and online engagement, not a return on their dollars via advertising.

“Contently is something that literally every one of our portfolio companies could use," Founder Collective Managing Partner Eric Paley told TechCrunch. “Contently makes content marketing turnkey for it’s growing base of clients."

The danger here is that what makes for really effective content marketing, take the wildly popular OkCupid Trends blog, is an authentic voice and a deep engagement with the subject. Yes, Contently is finding experienced writers to help create great posts. But a freelancer is never going to have the voice and insight of a person who actually works at the company, the path taken by blogging stars like Robert Scoble and Marco Arment.

The connection between these two events was harped on quite a bit in the media, but an analysis of the change in search rankings after the algorithm update, known as Panda, found that eHow, which houses the majority of Demand Media's editorial content, was not negatively affected by the change.

It was especially interesting since some of their peers in the "content farming" industry, like Associated Content and Mahalo, saw traffic on their keywords drop ad much as 93 percent. According to a report from Sistrix, Demand Media even saw its Google rankings increase a bit.

This past week Google announced that it was rolling out Panda to English language speaking nations around the globe, and making some small tweaks to filters here in the U.S.. But the results on Demand Media were dramatic, with traffic from Google falling more than 50 percent, according to Sistrix.

Interestingly, this second update has incorporated signals from average users. Google made it possible for people to block certain sites they don't want to see in their results. In a blog post Google’s Amit Singhal noted, "In addition, this change also goes deeper into the “long tail” of low-quality websites to return higher-quality results where the algorithm might not have been able to make an assessment before. The impact of these new signals is smaller in scope than the original change: about 2% of U.S. queries are affected by a reasonable amount, compared with almost 12% of U.S. queries for the original change."

Demand Media, feeling the heat, issued a statement and blog post affirming that, "Certain third parties that have published reports attempting to estimate the effect of recent search engine algorithm changes made by Google on traffic to the Company's owned and operated websites have significantly overstated the negative impact of those changes on traffic to eHow.com, as compared to the Company's directly measured internal data." They didn't, however, issue any of their internal data to back up this counter claim.