In Search of the Blog Economy

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The Inverse of Advertising
While blog publishers and ad networks continue to scramble for some of the familiar revenue that has always fueled content, others see the real blog economy in new efficiencies for communication both within the corporation and between companies and their customers. Dave Winer, host of one of the oldest blogs online, Scripting News, argues that the blogging business model is "the inverse of advertising. The economic revolution of blogging is about manufacturers giving up on advertising and going direct, talking to their users, and their competitors' users, as if they were people and not abstract beings (a.k.a. ‘consumers')."

Using blogs as an alternative to advertising is precisely what BTI Communications did recently to promote its voice-over-IP solution at the VoIP Insights Blog, which is more of a general informational blog about the technology than a stark promotion of BTI. "We decided that because the VoIP market is so fiercely competitive, with so many big companies, that [BTI] couldn't hope to compete," says Sally Falkow, chief strategist for Expansion Plus, a marketing firm that runs the blog. With frequent posts and strategic use of the right keywords, the blog has worked its way into the search engine indexes and many of the RSS news feeds in just a few months. And the ROI from this type of project, which usually runs $3,000 to $5,000 a month, is demonstrable. Falkow can track the RSS subscribers, where her postings are being published on other sites, and even how her postings have gotten the blog onto the first page of search results for the most relevant VoIP-related keywords on the major engines. Traffic to the BTI corporate site is up 38% and "people are calling the company and saying they found it on the Internet. They never had anyone do that before," she says.

The ME Model
Many in the blogging field feel that the business model for this platform is much subtler but perhaps more profound that mere advertising income or PR value. "Blogging so far has been about ‘ME,' as in ‘monetize elsewhere,'" Ross Mayfield, CEO of social software firm SocialText said at last year's BlogOn conference. The revenues come less from the blog directly than they do from the ways in which smart companies monitor blogs for consumer information that they can leverage elsewhere, or revenues come from the savings from using blogs as a way companies to communicate internally.

"We have several dozen clients, mostly pretty big, using blogs internally," says Pete Quintas, CTO of SilkRoad, which makes social software for media companies and the enterprise. Email, once considered paperless and highly efficient, can't hold a candle to the efficiency of using blogs to keep everyone up to speed within an office and at corporate outlets around the world, SilkRoad believes. "When Best Buy has a product recall, to coordinate pulling products off of store shelves it would be easier to distribute that via Web logs rather than having to call up all the stores over the phone," says Quintas. Blogs soon will be contributing indirectly to the bottom line at many etailers, who will use software like SilkRoad's for their own employees to blog about current products or to gather comments from users. "We're working with clients on wrapping their sites with user-created content," says Quintas.

Is it perchance too much to dream that blogs will one day graduate to the most coveted of business models—subscriptions? Well, subscription only access may be coming to a blog near you. SilkRoad is designing that capability into version 2.0 of SilkBlogs, a blogging tools set that powers media properties like Now publishers will be able to create premium blogs so that only excerpts of a blog entry are shown free to all but users must pay to see the full item and blog archives. "There are people in the industry who blog whose content is seen as more valuable and something you can charge for," says Quintas. "You will probably see this around very specific areas or analyst type of content."

If the blog buzz looks suspiciously like Internet hype of 1997, look again. To their credit, most of the Webrepreneurs pouring into the space have learned from past dotcom excesses. Unlike their predecessors, they are keeping both expectations and overhead low in these early stages. No one is staffing up exorbitantly, promising to "kill old media," or suffering delusions of IPO grandeur. What they are doing is exploring the business possibilities of a remarkable platform with tremendous promise. Blogging may be the natural evolution of Web media, because it brings together most of the Internet's native strengths: personal voice, intimacy, immediacy, hyperlinking, and genuine interactivity with the audience. The business models that eventually emerge from blog media may tell us a lot about how a new generation of highly engaged and informed "pro-sumers" want to encounter both their media and the marketing machines that drive those media.

Companies Featured in This Article
MessageCast, Inc.
SilkRoad Technology, Inc.
Six Apart

Blogs Featured in This Article
A Dirty Shame
Art of Speed (Nike)
VoIP Insights Blog

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