Recently, I took on 200 new members of Freelance Writers Den. It’s always interesting to hear the stories of members and why they join.

One tale I hear from many of the writers. The details vary, but the basic drift goes like this:

“I’ve been making $8 an article on [insert name of your favorite content mill or bid site here].

Now I’m broke and never have time to figure out how to earn any more money. I’m burned out from having to write hundreds of articles quickly to make even grocery money.

Can you help?”

Yes, I can. I’m going to tell you to do something that may sound crazy, but trust me, it’s going to pay off big in the end.

Stop writing for peanuts.

I know. That sounds terrifying. But if you’re serious about building a lucrative freelance writing career, it’s really what you should do.

Why? When you write for a pittance, bad things happen.

What should you do instead? Write a few projects for quality clients for free.

How is writing for free a faster road to great freelance earnings than writing for cheap?

Let me tell you what you get when you do free-sample work instead of being underpaid and overworked by a bid site or content mill:

Clarity.

When you write for free, there’s never a confusion that this particular writing activity could turn into a living somehow, if you could just figure out how to crank out six or ten articles per hour, eight hours a day. With free writing, you know it won’t ever pay your bills.

You’re clear on why you’re doing this writing — because you love writing short stories, you need a writing sample for your portfolio, or you love the charity whose newsletter you volunteer to create.

It’s a step on the road to where you want to go. And because it pays nothing, it’s not a step you’ll be tempted to linger on. Instead, you’ll want to quickly move forward from your pro bono work to paying gigs.

Self-esteem.

There’s something about writing for laughably low rates that kills writers’ souls.

You start thinking somewhere deep down that $8 is all you deserve. That your writing must not really be very good. When in fact mill pay is low because their business model is broken. It’s nothing to do with you.

The way writers are treated on content mills can be unpleasant, too, along with the low pay.

Pretty soon, you feel scared to even pitch anywhere better.

Every time I see a writer comment on a forum that “content mills are a great place to get started,” I just cringe.

Honestly, I have to say I don’t think it they are, if your dream is to pay serious bills from your craft and not just earn a little date-night money.

If you simply need to get a few samples and do some practice writing, start your own blog. That way you’ll have control over what gets published, and be creating a site you could build and monetize if you want, and you’ll keep the rights to all your posts.

When you do a volunteer project for a local business, small-town newspaper, or local charity, you have the pride of knowing you wrote for a real-world client and pleased them. That work can get you noticed and often lead to the next client, too.

You’ve proven you can write professionally, and it feels good. That helps you pitch paying clients with confidence.

Clips.

Besides the skinny paychecks, cheapo articles for content mills often don’t produce any viable clips for your portfolio. Maybe you get lucky here and your Demand article ends up in USA Today online or something…but those breaks seem to be rare.

We all know many editors throw queries right in the trash when the writer’s bio line reveals their whole experience is writing for Textbroker or Demand Studios. This is another reason writing for mills is a trap…you often don’t get any clips that help you move up.

When you do pro bono work for legit companies or nonprofits, you end up with real samples that can impress prospects and get you hired for real-pay gigs.

Marketing.

When you write for $8 — or $15, or whatever the pittance is — you never have time to market your business and find better clients. You’re trapped in a gerbil-wheel cycle of having to write every waking moment just to keep the lights on.

When you let that go and focus on the long-term goal of finding real paying clients, you realize there’s only one way to get them.

You’re going to have to aggressively market your business. So that’s what you do.

Because you’re hungry. And you want to find those clients fast, so you can make real money and avoid having to crawl back to a cubicle job.

Raises.

It’s impossible to get a raise from super-low rates to anything reasonable. Raises are usually incremental, but getting a 10 percent raise on $8 isn’t going to change your life. You’d have to get a tenfold raise for the pay to start to amount to anything, and that just ain’t gonna happen.

And you can’t get that raise anyway, because mills almost never raise their rates. These are clients whose pay won’t ever change, so you’ll never move up.

To create a freelance business where pay will steadily grow, you have to find a different kind of client — the kind where after six months or a year, you could get more money.

If you’re too broke to quit writing for cheap right now, come up with a savings plan now that could free up a few weeks of your time to try the free-writing strategy for building your freelance writing business.

Then challenge yourself to stay away from Craigslist ads, content mills and the like for just 30 days. Nobody I know who’s tried this has ever had to go back to writing for peanuts.

Have you written for free, or for cheap? Leave a comment and tell us what you do and why.

Let’s face it — most blogs don’t pay for guest posts. It’s considered a marketing activity by the writer, who gets a link back to their site.

That can be worth it, too. I’ve gotten some amazing connections and clients from blogging on popular sites.

But I believe writers should be paid for their work. And sites that take guest posts still get a piece of writing out of the deal.

So I did a crazy thing…

Back in late 2010, I did something sort of nuts — I decided to start paying for guest posts.

At the time, my audience was pretty small and I was still earning most of my living from freelance writing.

It didn’t make economic sense on the face of it. I just thought it was the right thing to do.

I needed to put my money where my mouth was. I hoped I might inspire (or is that shame?) some other bloggers into paying for posts as well. I also hoped being different from the norm by being a paying writing market might get this little blog some attention.

And it worked

On both fronts, it worked! Make a Living Writing has received loads of attention, subscribers, and traffic from being published in many digests of paying markets. Even better, quite a few sites decided to pay after seeing me do it.

But I’ve neglected a critical last step here — to connect you to those paying markets so you could rake in some cash.

Fixing that now. Here’s my personal list of blogs that pay around $50 a post or more, from my own writers’ guidelines page. They’re listed in the order they began paying for posts, most recent first:

1. Your Online Biz — Thrilled to have inspired Darnell Jackson to top me — he began paying $100 a post in March 2013. Nice job, Darnell.
2. Write Your Revolution — Sarah Russell’s blog joined the ranks of $50-a-post paying markets in February.
3. Be a Freelance Blogger — Sophie Lizard has joined the smart set and now pays $50 a post.
4. The Renegade Writer – Excited to add Freelance Writers Den’s Other Den Mother Linda Formichelli to the list of people who’re taking the high road and paying $50 a post.
5. ReadLearnWrite – Paying $50 a post after seeing my Problogger post about paid guesting in Feb. 2012.
6. David Worrell’s blog, Rock Solid Finance (formerly Your Inside Guy) was the first niche blogger to jump on board my bandwagon and start pay $50 for guests posts back in late 2010. So I think he’s the coolest. You should definitely read his blog.
   
7. Freelance Switch – they pay around $75 per post. So I think they’re cool. And now I even guest blog for them on a regular basis myself. (They are owned by Envato, which has a half-dozen other sites that pay, too.)
8. HouseLogic – This site operated by the National Association of Realtors pays $1 a word — I had an opportunity to interview their editor a while back for an article for The 2013 Writer’s Market. If you’ve got a good twist on a shelter story and strong reporting skills, you know where to go now.
9. One Spoon at a Time — Paul Wolfe was inspired to start paying $50 a post back in Fall 2011. This one was inspired by my announcement…feels good to know I’m helping to create new paid markets for writers.
10. OnText – OK, they only pay $40 a post. But maybe some of you would like to know anyway, I’m betting.
11. Patch – AOL’s Patch.com, as of this writing, often pays $50 and up for short blog-postlike articles.
12. Make a Living Writing — can’t forget to mention my own site! Still proudly paying $50 a post. (Due to overwhelming response, I now only take guest posts from students or grads of Freelance Writers Den or Jon Morrow’s Guest Blogging course.)

Those dozen get you started. Fortunately, a couple other bloggers have been busy compiling more helpful info on blogs that pay, and now there are several other good lists out there — and I’ve collected links to all of them here.

How to find 100+ more paying markets

Two are by Bamidele Onibalusi of the newly renamed Writers in Charge (formerly YoungPrePro), and one is by the abovementioned Sophie Lizard of Be a Freelance Blogger. One older list is from the freelance-training site Matador. The assignments range from blog posts for niche bloggers to fully reported online feature articles for major national magazines’ online sites.

Here are links to those below:

•  Writers in Charge’s original list of 30 paying markets (which really lists 33)
• Sophie Lizard’s 2012 list of 45 Paying Markets (has good deets on the rest of those Envato sites I mentioned above)
• Writers In Charge’s 2013 list of 45 More Markets (which really has 46).
• Matador’s 2010 list of 27 markets feature a wide range of pay rates up to $1 a word+ and Matador is itself a paying market, as Oni notes on one of his lists. Rates may have changed at some markets since this was published, but it’s a nice compendium of higher payers.

I got curious and compared all these lists to see how many listings were unique. Eliminating all the duplication between the lists and counting my 12 above, there are nearly 120 unique paying websites and blogs listed in all. Nice, huh?

I’m thrilled to have helped add a few names to these lists of places that pay. Possibly my finest achievement here on the blog.

Now that you know how many markets pay, I have to ask:

Why not get paid?

As a blogger, you’ve got a choice when you look to guest post. If you’re going to guest post for exposure, I say, why not get paid, too?

I recommend making paying guest markets your top priority. That’s what I’ve done and it’s allowed me to earn quite a lot while also getting attention for my writing and my blog.

And if you have a blog you’re looking to build, consider paying for guest posts. Just a suggestion.

Ever gotten paid for a guest post? If you know more paying markets, please add to my list.

Have you wondered why content mills can’t pay writers better?

If you write for content mills — or have in the past — you know their pay rates are rock-bottom low. I gather $20 an article is the big time, in the mill world.

I hear about low pay from content mill writers all the time. The stories are remarkably similar, and usually go like this:

“I work really hard, putting extra time into research to make sure my posts are high quality. Still, I just get the same $15 as everyone else.

“And now, the mill is cutting back on how many good assignments they have, too. I know a lot of what they get is garbage…why don’t they just raise their rates and work with better writers?”

It’s long been a question writers shout to the sky, or ask other writers on chat forums. Why can’t mills pay more?

But that’s not where I ask. I’m a business reporter — so I go to the source.

Let’s peek behind the content-mill curtain

As it happens, one of the biggest content mills, Demand Studios, is owned by a public company, Demand Media. That means their finances are a public record.

That’s right, it’s a free look at the inner workings of how content mills make money! But I believe few mill writers ever read these reports.

This week, Demand Media released its annual report, disclosing its revenue and income for the year. I believe taking a look at this will help writers understand why mills pay squat — and why they always will.

In short, it’s their business model. It doesn’t work very well.

Demand’s rise and fall

Before we dive into the numbers, a little context: Demand is one of the biggest — and widely considered one of the most successful — mills ever created.

By 2009, there was buzz that they were wildly profitable and would soon put the New York Times out of business and destroy the entire model of hiring professionals to write reported articles. Then Demand filed to go public in late 2010, and the hype met reality. By all standard accounting measures, Demand was in fact losing money.

The company managed to go public anyway, and enjoyed an initial run-up in the stock market.

Then Google changed its algorithm to penalize sites like Demand’s, that rely on low-grade, repetitive, keyword-stuffed content. Overnight, Demand’s sites lost about one-quarter of their traffic. The stock crashed from a high around $24, and stayed down, hitting a low of $6 a share in fall 2011.

You can assume all the other, privately held content mills experienced something similar.

So there’s reason one why Demand doesn’t have more money for you: low company value.

High stock prices give the company a high value to bankers, and allow it to easily borrow capital for growth. Low stock prices mean a cash crunch.

Here’s what Demand made off you

So, let’s put on our green accountant’s eyeshades and take a look at how Demand’s doing.

In 2011, Demand brought in $325 million. Of that less than $200 million came from its content-development business — the cheap articles writers create for Demand’s stable of sites, which include eHow and Livestrong.

See, Demand has another business that’s a real cash cow and low-cost, too…domain name registration. That’s where they make the rest of their dough.

What did they net on that nice fat income? Nothing. Demand lost over $18 million in 2011.

Now, on to 2012. Demand made $381 million last year, $227 million of it in content development.

This time, they managed to squeak out a profit: just over $6 million.

Can you believe it? They had an audience of 125 million last year. That story you’ve been told about an ad-click affiliate goldmine — it’s really hard to make it pay, when you have to pay writers to create the content that draws people to those ad pages.

So, reason two mills stay cheap: Demand has pulled out of the red, but they’re still not making much money. That’s a profit margin of under 16 percent. The markup on running a coffee stand, by contrast, can be 200 percent or more.

Reason three: Growth prospects aren’t great. It’s unlikely Demand will grow hugely in size from here. Even if they did, there’s only a tiny profit in this way of generating income. So the outlook isn’t that there will be more assignments and money, unless they acquire new sites — but a low stock price makes it harder for them to buy up companies.

Reason four: Costs are going up. To get that huge traffic, Demand has to advertise on other sites. As the Internet gets busier, it’s harder to stand out in the mob, so Demand has to advertise more. They spent $12 million on “traffic acquisition” in 2011, and had to up it to $19 million last year.

And, of course, they had to pay you, the writers of the content. They do a good job of hiding how much that was in the report — closest line item I’m finding in expenses is “product development” — for which they spent over $40 million.

Compare that with the profit line and another truth emerges: Demand can’t afford you, even at the low wages they pay you now.

If what they had on their sites was more valuable to people, they could drive traffic with natural search and readers’ social shares for free, and spend little on ads. But most of their articles are low quality, so they have to flog the Internet to drive traffic in the door. If they didn’t have that cost, they’d have made four times as much profit.

Why don’t they blow up their model, pay more for great content, drop the marketing strategy, and earn more? Because that’s not how they roll.

It would take a huge, risky up-front investment to switch to a quality model…and clearly, they don’t feel confident paying more would earn them enough additional ad revenue to make it pencil out better than what they’re doing now.

Also, with the current low-quality model, standards are low and so the pool of potential writers who can do the work is plentiful. That allows them to continue pitting thousands of newbie writers against each other to keep costs low. Switching to quality would mean fewer qualified writers, and possibly — eek! — rising rates.

Demand’s new plan to make real money

There’s writing on the wall on where Demand is going with their business — and it doesn’t bode well for freelance writers.

In December, they bought another big domain-name site, Name.com. And this week, Demand announced the company is exploring a plan to separate their two businesses into two different companies. One business would have the domain name sites, the other the content mills.

Demand’s stock went up right away when they said that, for the first time in a long time.

Why?

Stock investors like easy-to-understand business models. They also like high-margin businesses.

This move will allow Demand to get more for its higher-margin domain business. The cost-heavy, marginally profitable content biz is dragging down the stock’s value. The company grew its revenue from domain registration last year, too — it’s a bigger percent of the pie now.

Demand also quietly killed off some of its content sites last year, the report states, and took a write-off on them.

If I were writing for Demand, that might make me bite some fingernails. What would you do if the site you’re writing for went ‘poof’ one day? I recommend having a plan.

There’s talk that they will fight their Google penalty by commissioning more better-quality, longer-form articles. That’s basically the one glimmer of hope here for writers.

I’m still waiting to see if they plan to pay more for that better content, or if there’ll be much of it. I’ve been hearing this one for years, but not seeing a lot of changes.

On the other hand, splitting the company could also allow Demand to more easily sell off, fold, or downplay its less-profitable content business. My money’s on it going more that way than the better pay/better articles direction.

Even if they might pay a few writers more in the future, 20 years covering mergers and acquisitions have taught me one thing: Companies don’t spend money while they’re cleaning up the balance sheet for a spinoff or sale.

So, reason five: Demand’s reorganization means spending cutbacks for now.

To sum it all up, the trends here for content mill writers aren’t good. It could be time for Plan B — getting out and proactively marketing your writing to find your own, better-paying clients.

What do you think of content mill pay, and where it’s headed? Leave a comment and give us your take.

This blog was born from my hatred of low-paying content mills and their habit of writer exploitation.

I thought if I could shine a light, and show writers there are real clients and professional pay rates elsewhere, mills might dry up and blow away.

Yes, I can hear you laughing from here.

Instead, over the past five years, mills have sprung up like toxic mushrooms under every shady, damp spot on the Internet. I get an invite to sign up for some new “great opportunity for exposure” from a startup mill nearly every week.

This week, I was in a unique position in my quest for fair writer pay.

At NMX (a/k/a BlogWorld) in Las Vegas, as I cruised the trade-show booths, I noticed something: Many of these companies were promising to develop content for blogs — lots and lots of content. Cheaply, too.

Slowly, it dawned: They were content mills.

Most weren’t big names (I gather Textbroker was lurking somewhere, but didn’t seem to have a booth.) But there they were.

Real, live content mill owners. I thought I’d go have a chat with them about their rates.

(The names of these mills have been omitted to avoid promoting in any way the very thing I aim to destroy.)

Content mill owners in the flesh

So I went to talk to them and find out what they charged, and how they felt about their rates. I got a couple of them to really talk to me and answer my questions.

You’ll be proud of me to know that I resisted the urge to shout and/or strangle anyone. Keepin’ it pro, folks.

“Are you looking for writers?” I’d ask. “I run a community with more than 600 writers.”

“Sure,” they invariably replied.

“What sort of rates do you pay writers?”

I got two basic responses from here:

Type #1: Unrepentant ripoff artist

One owner, a young Asian man, told me he was looking for web content writers. He’d pay, like, $100 for a multi-page website, he proudly related.

When I said I get three times that often for just one page, he looked baffled. “That’s way too much,” he asserted.

He was looking at me like I’d arrived from an alternative universe. I think he was right.

Maybe in the Phillippines those kind of rates work, bud, but it’s hard to live off that in the First World.

“We’re always looking for quality writers,” he told me.

At those rates, I just bet you are, I thought.

“Best of luck with it,” I said with a big smile.

Type #2 Even I’m embarrassed

The second mill had a couple of women owners.

“We have a staff of 22 writers we work with,” they told me proudly.

“And what do you pay per blog post?” I asked.

“Twelve dollars,” one responded.

And then it happened.

As she said that pay rate, she winced.

Even she knew that was a ridiculous, untenable rate. She couldn’t even say it to me with a straight face.

And in that moment, I realized mill owners know what they’re doing is unconscionable — at least some of them do, anyway.

They keep doing it because it keeps money in their pockets. They do it because they can.

Why? It’s simple — the desperation and low self-esteem of writers makes their business model possible.

Content mills aren’t going anywhere

So. There you have it.

After five years of fighting for better pay for writers, and after looking content-mill owners right in the eye, here’s what I’ve learned:

Content mills aren’t going away.

As long as there are suckers — and I gather there’s one born every minute, just like P.T. Barnum said — and entrepreneurs hoping to exploit them for low-cost labor, mills will continue.

They may not thrive — have you seen Demand Media’s stock lately? — but mills will be around.

As one dies, another is born. Bet on it.

What you can do about content mills

Given that it’s unlikely our outrage will crumble all content mills into pixel-dust, there’s only one question on the line: Are you willing to work for mills, or not?

Mill rates will always suck, because the mill business model is failing. SEO junk content put against ad clicks doesn’t bring in enough to pay writers a fair wage. That’s unlikely to change.

I’ve learned there are only two things you can do about content mills — vent uselessly as you continue to earn slave wages, or opt out. Refuse to play their game.

Think of mills as The Underworld of freelance writing. You don’t have to stay in that dark place, earning pennies.

Instead, do it the way all freelance writers did in the many decades before content mills were ever invented — market yourself and find clients that sell a real product or service.

Once you start looking, you won’t believe how many great companies are out there that need your writing help.

These proven businesses have real money to pay writers. Content mills never will.

What would you say to content-mill owners if you met them in person? Share it in the comments.