In Search of the Blog Economy

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It has taken nearly a decade for the vast majority of Web content to prove the old mantra that media money always follows the eyeballs, but it won't take that long for Web logs to find reliable business models.  These diary-like collections of links and commentary—also known as blogs—have so effectively grabbed passionate, highly targeted audiences in so many different niches (and their one-person overhead is so low) that sporadic success tales are already trickling in. Simply by running Google ads and affiliate programs with etailers, the host of PVRblog claims to bring in hundreds of dollars a month. The venerable pop culture venue BoingBoing ekes out a slight profit off of just a small inventory of site buttons. And at the height of the 2004 campaign, political site DailyKos.com reportedly brought in up to $20,000 in a single month from ads by politicians and causes.

To date, these are the exceptions, since most bloggers are lucky to pull in $50 a month off of Google contextual ad programs. But even with 2 million estimated active blogs online, destinations like Gizmodo.com and Wonkette.com have emerged as low-cost niche sites that attract the elusive youthful demographic advertisers will chase anywhere. "All of those sites are seeing really strong ad buys," says Anil Dash, VP of professional networks, Six Apart, which supplies Web-based blog services like TypePad. Many of the sites on his platform tend to show up high on Google's search results pages, which in turn drives highly qualified eyeballs to the blogs where they click text and display ads and affiliate program links.

And where there are eyeballs, there are business models. Webrepreneurs are lining up to test new and old content revenue models on the new, new thing, from blog-specific ad networks to multi-title publishing, custom publishing, and even a revival of content "push." It's beginning to look a bit like the Web of 1997.

Brother Can You Spare an Ad?
BlogAds has emerged as the foremost ad network serving into some of the most popular political sites, including DailyKos.com, Instapundit.com, and Wonkette.com. Run by Web services provider Henry Copeland, BlogAds has hundreds of clients, including The Wall Street Journal and Paramount Pictures. At prices that peak at $5,000 a week for premium placement at DailyKos.com and range downward to $10 for many of the blogs in the network, advertisers can plant display ads at any of the 500 sites Copeland has gathered. BlogAds passes 80% of the fee on to the blogger. Despite reports of an ad revenue windfall at some blogs during the height of 2004 campaign, Copeland insists "only a few handfuls of bloggers are seeing enough money to impact their lifestyle." Clearly, political blogs led the way in terms of traffic and revenue last year, but Copeland says that entertainment, sports, and science-oriented sites are growing in traffic and income now.

Two New York firms, Weblogs, Inc. and Gawker Media are trying to apply a traditional publishing model to the platform by creating multiple blog titles and selling ads into specific niche audiences as well as across the network. Former Silicon Alley Reporter publisher Jason Calacanis gets "tens of millions of page views" to 60 titles at Weblogs, Inc., ranging from broad consumer electronics blogs like Engadget.com as well as "nanosites" serving the grid computing and RFID chip industries. Despite the millions of active blogs out there, Calacanis believes in putting strong writers online to build audiences slowly and virally. The bloggers themselves make between $200 and $2,000 a month, and Calacanis insists the company probably could be profitable now if he stopped building it out. "It's not a sprint. Our projections lead us to believe that it is a two to three year process to build these brands to the level of critical mass," he says.

Gawker Media is run by Nick Denton, formerly of syndication service Moreover. Gawker Media successfully sells advertising into 23 million monthly page views at nine sites, including the Gawker.com blog for gossip and Gizmodo.com on gadgetry. In the past six months major brand advertisers like Absolut, Nike, and Paramount Pictures have discovered blogs and are paying Gawker upwards of $20 CPMs to reach an audience of very upscale, metro readers who are also big influencers. According to Gawker, about a third of blog readers are also blog writers, viral agents who link to and spread the word on new products.

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