Blogs: Rolling In It...

Is there money in blogs? The ever-sharp JD Lasica asks the question and then points to posts by Steve Smith (no) and Steve Rubel (yes). Smith argues that "blogging is less a business model than a thoroughly compelling communications model that keeps users coming back two and three times a day more effectively than standard content refreshes." Rubel points to the chain-blogging companies founded by Nick Denton and Jason Calacanis as the proof of business concept.

Well, they're both wrong - and for the same reason. It is a business model, but it's not about content.

Blogging is a phenomenon, but it's not new. Calacanis knows this; we published competing blogs back in the Silicon Alley days, but we didn't label them as such. They were newsletters, or online magazines, or communities, or whatever. They were online content - news and other items served quickly and with attitude and opinion. And yeah, we even had typos.

So in that sense, the revolution unfolded a decade ago. People communicate online. They publish. They argue. They send little goofy pictures to their friends. They type "L8R Dude" on computers. Yawn-o-rama, baby. It's 1996. And Bill Clinton's in the White House.

Which brings me to the business model. Which is software and hosting and services. Look, everyone's got a story to tell. Some stories will be compelling. Most won't. And only a very few bloggers will be compelling over time. But what is clearly exploding is the desire to tell a story and the ability to do so. This is where the software comes in. I think anyone who was publishing online in 1995 would tell you: we would have killed someone (probably our partners) to get our hands on publishing tools as good as TypePad, based on standards and formats as wonderful as open source and RSS. This is where the action is at.

Funny thing about Denton and Calacanis and their bog empires. I see they're making some dough now, and that's wonderful - especially for the army of underpaid, underemployed writers out there. But I tend to read Jason's blog and Wonkette, and that's it. There may well be a business model in creating the Primedia of blogs, all special interest and cross-selling. But it won't be huge and, I hate to say this, it won't be earth-shattering.

But the software is. TypePad is a fast-growing company. Because I invest in what I use, I'd buy stock if it was public. I also use a bunch of other tools on this little side venture of mine: BlogRolling.com, BlogAds, Google's AdSense and Search, Technorati, Bloglet, MyYahoo, Feedburner, Bloglines, Kinja, Feedster, Sitemeter, and Amazon. My revenue? Well, there is some and I'm thrilled at getting paying advertisers - not for the dough, but because people are reading and reacting, about a thousand of 'em a day. I think Fred feels the same way. And I'd bet even the megastars of blogging, like Jeff Jarvis (who is worth reading everyday) and Glenn Reynolds (who is most definately not) aren't in blogging for the dough - and they're the Oprah and Rush of blogging!

So blog on folks, I'm there with you. But don't expect to be paid for it - expect to pay for it. And invest in the software, that's the real action.

UPDATE: Fred weighs in on the question on his blog, and Jason in the comments section here. Both make good points. Go read Fred's, but his basic point seems valid: "There's money in blogs, for sure, and I think the big bucks will be made in scalable platforms that leverage all that is happening in the blog world." Hey Fred, that's what I meant to say - you said it better! Jason says hes basically doing just what Fred suggests with Weblogs, Inc. Hey Jason, can you add one desperately-needed feature? "Comments tracking"? Good stuff.

UPDATE II: Jeff Jarvis does a great job of creating a summary of potential revenue streams for blogging. Jeff's a true believer and I'm a confirmed skeptic in this area, but here's his take:

There's no question that there are big, society-changing things here and that people will make and lose big money on their bets. But which bets will win? Well, your guess is as good as mine.

UPDATE III: Silicon Valley VC Tim Oren jumps into the discussion. His take: From my point of view, the most differentiating characteristics of citizens' media are low barriers to entry, and precision. They are the two faces of the long tail phenomenon: Low entry barriers enable the creation of diverse content by diverse people, precision in access lets readers find matches to their tastes without unendurable overhead. More on his terrific blog.

Comments

[Jason]

>> But it won't be huge and, I hate to
>> say this, it won't be earth-shattering.

I think you're correct... no blog is going to be earth shattering. They are going to be like @NY or SAR Daily. In other words they could grow to a couple of hundred thousand to million in revenue.

Of course, if you owned 100-500 of such blogs you might be able to build a nice sized business. And, if one of those brands turned into a hit of MTV, Car and Driver, ESPN, etc. proportion you could be looking at a huge return.

In some way the 65 blogs we've launching in 11 months is a media mutual fund. I don't expect them all to break out, but i know that at least five will become multi-million dollar a year busineses... and that's all I need to make a real business.

Grandslam? Probably not.

Home run, triple... definatly.

best j

[Tom W.]

Hey man I hope you get the HR. And you're right, it scales to a nice-sized biz that will let you do more of that scary water-skiing .

But you'd agree that the software rules, right?

[Jason]

software is becoming a bust actually... anyone can build anything for almost nothing instantly.... for example, look at all the social software sites there are in just one year: http://socialsoftware.weblogsinc.com/entry/9817137581524458/

The future is software+services+content. We're not just building content at WIN... we're building software that gives us the ability to manage 100s--heck, thousands--of blogs, the advertising on them and the editorial process for creating them. This is why we are at 65 blogs and Nick Denton is at 8--he doesn't have a tech team and adding features is a bunch of work for him. For us, we have dedicated technology resources and we can add features that go across all 65 sites instantly. That being said, those are 8 very impressive brands, and those brands are worth a couple of million each if he were to sell them--no doubt about that. Heck, if he got just $1m per brand he is sitting on an $8m business, and I think that is a real number. Gawker would be bought for $1m, Gizmodo for $3-5, Wonkette maybe not as much, and the new ones are not so great yet, but they will be.

Our business wouldn't work if we just did content, the future of software in my mind is adding a service or content. Software alone doesn't work so well any more.

Who knows, maybe i'm still drunk off Ted Leonsis' content is king talks from 1995!

either way, this is a hell of a lot of fun!!!

[Tom W.]

Well that sounds like an interesting plan, frankly. I'll bet that if you build and develop that platform, someone will want to buy it.

Why not call it "Greenhouse" (ok, that was a gratuitous Leonsis swipe, I know....)

[Jason]

Out of all the folks I got to spend time with--and I know you know what I'm talking about--Ted was one of the ones who actually got it. Kurnit was the other guy who really got it... oh yeah Seth Godin too.

There's a bunch of Ted, Scott and Seth in Weblogs, Inc. for sure.

[Tom W.]

Indeed. How many blogs get 500K page views a month? I know of only a few personal ones that do...

[JD Lasica]

Well, let's see. First, I agree that bloggers who expect to make a living from their prosaic words alone are probably living in dreamland. Yes, it's nice that you have thoughtful things to say and I'll be coming back to visit you on a regular basis, but the blogosphere is about niche publishing, and niche isn't about generating advertising dollars.

Having said that, I'll pull down a fair sum this year in advertising revenues for my main blog, and considering that I haven't done anything in the way of recruiting advertisers or making a major marketing push, that's OK, when combined with freelance writing and book income.

Some of the startups you listed at top, Tom, are dogs, frankly, and probably won't be around in 2-3 years, but two or three others may well be keepers woth keeping an eye on. (Which is which? Who knows! That's the beauty of markets.)

This ain't no bubble. It's a new emerging mediasphere. And it'll be around for a long, long time.

[susan mernit]

blogs work now partly because they are (relatively) low-margin enterprises--I agree with Tom (and Jason) about blog businesses as new tradenewsletters. Interesting question is how will consumer plays shake out?

[Hans Henrik H. Heming]

Hi

All of a sudden everyone it writing and mentioning “The Long Tail” as the next big thing - or as a fact of life. Why?

Of course technology, internet and that kind of stuff gives new possibilities, but isn’t The long Tail about common sense? I think so!!

Best Regards
Hans Henrik

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