Blog Bucks

The Steve Smith column that I linked to in my previous post generated a little debate among Steve Rubel and Tom Watson about where the money will be made in blogging.

Steve Rubel says blog networks like Gawker Media and Weblogs Inc will be where the action is.

Tom Watson says the software providers like Six Apart and others are where the action is.

I don't agree with either of them.  I do think Gawker Media, Weblogs Inc, Six Apart, and other blogging software providers will have interesting businesses.

But I think the action is in the advertising platforms and meta data and content distribution systems that are growing up around bloggings and RSS. That's a mouthful, so some examples might be helpful:

Advertising platforms - Adsense, ContentMatch, Kanoodle, AudienceMatch

Meta Data - Technorati, Blogpulse, Findory

RSS/content distribution - Feedburner, Bloglines, Newsgator

These are just examples, not anything near a definitive list, and certainly not a "best of" list. 

I believe that content creation via blogging is not a business in and of itself for almost everyone.  It's a labor of love, a hobby, an outlet, a networking exercise, or an extension of a brand.

I believe the software business, like all software businesses, eventually turns into a feature war and gets commoditized.  The hosted software business, TypePad for example, may well avoid that fate due to the lock-in it has over its customers by virtue of URL, RSS feed, template, layout, etc.  I think that it is in many ways a hybrid between a software business and a data business.

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.

Comments

[Tom W.]

Hey Fred, that's what I meant to say - you said it better!

Jason weighs in over on my comments section - basically says he's trying to build what you describe....seems to confirm there's no big dough in pure content.

[AJ Kim]

>>I believe that content creation via blogging is not a business in and of itself for almost everyone.  It's a labor of love, a hobby, an outlet, a networking exercise, or an extension of a brand.

Yup. It's the same dynamic that we saw with 'online community hosting' in the late 90s.

[Jason]

Fred,

Some quick thoughts... i'm getting ready for another launch so i can't hang out too long. :-)

1. Blog Search: The blog search sites are going to have a major problem dealing with Google, Yahoo and MSN. You call these sites "meta data," but the truth is they are search.

Google handles Metadata, Google knows what blogs are, and Google has 100-200k computers in their grid. The blog search sites are having a hard time staying up... Google will have a blog tab/search like icerocket does withing 30-60 days. When that happens users will flock to Google. Game over.... blog search sites will need to reinvent themselves. I think you'll see a blog search and web-based feed reader merge in the next two quarters... so, think Bloglines/Newsgator/Kinja + Feedster/Technorati/PubSub. That would be a nice combo.

2. Newsgator... I think they are a winner because of the fact that they are doing enterprise stuff. There are a lot of IT and communications issues around RSS feeds in companies and Newsgator is doing heavy lifting... it's a great model.

3. Bloglines, they have a big user base... they will get bought if the time it right.

4. However, the consumer RSS reader space is a bust... too many players, yahoo is in the space already and Google will be in there shortly. Don't see that as a big opporunity... reminds me of the newsreader software business in 94-97. lots of cool applications--then it's built into outlook. Game over.

5. Feedburner is interesting... software+services (I like that model). However, I can tell you that they will

a) get sued by blog publishers if they serve up ads in people's feeds without permission . I've told them this already in relation to our blogs--"you don't own the content and so you can't make money from it... our feeds are for non-commercial use. Denton has the same stance."

b) Google will *not* give them a piece of thier business for just running RSS feeds. Google has a two-way split with publishers already--there isn't room for a third person in that pie.

Now, if Feedburner merged with AdBrite, and they made their own advertising network that would be hot (to quote Paris Hilton).

6. MoveableType/Xanga/etc are great businesses, not sure how they can make it with so much payroll, but they got the 10m of VC money to play with so i'm sure they will be ok till they get bought by someone.

7. In terms of our business... which is content+technology I think we have a long slow road ahead of us... that road will make money, be high margin, but we are going to have to fight, and fight and fight to build our brands as people attack us from the top and bottom. It's going to all out war.... and it's goingto be bloody as hell---and I'm loving it!!!!!

[jake]

Over at Gothamist, we're doing quite well with our advertising, but I think everyone should be pretty conservative about their forecasts for blog networks as a business. It's simply too early to tell on a number of factors. Off the top of my head:

- what will CPMs look like over the next few years for small sites?

- what will the major media companies (and minor companies) do when they see money in this game?

- what will happen to traffic on popular sites as new sites emerge in the same areas? is it possible for all of the top sites to maintain multi-year dominance?

- is it possible to run a "media empire" with no real staff, no office, etc? (if it is, lots of players should flock into the game).

- is there a maximum number of high value topics/areas/geographies? nick denton may have only 8 blogs for a reason.

There are lots of these questions, and a whole lot more, especially when you start digging into the way the businesses are set up, with revenue splits, ownership of the IP on the sites, etc.

Bottom line: it might be premature to give up that day job just yet.

[Jason]

>> is it possible to run a "media
>> empire" with no real staff, no
>> office, etc? (if it is, lots of
>> players should flock into the game).

We have six people and no office.

We're profitable.

The facts speak for themselves... if you're sites are good enough to reach 20m pages like ours have you can make a business out of it.

if you blogs get < 10M combine you're not going to make it.

best j

[jake]

i have some doubts that you are serving 20m impressions per month- but since the WIN stats aren't public we'll have to take you at your word.

if 20m per month is required for survival, then i guess WIN blogs are going to be the only blogs left standing- because i know gawker, gothamist, metblogs, boingboing, etc- we're nowhere near those numbers. bravo, WIN!

of course, on 2m impressions per month, we're seeing a lot of cash/profit, so you might be wrong about that cutoff. we shall see.

[Jack Bryar]

As a new entrepreneur in the media space, my impression is the blogosphere will generate far more money as a source of content than an enabling technology. The blog is simply a different form of self-publishing. The technology is not the critical value point.

What the blogosphere does is create a massive "minor league" franchise of writers. When we look at the space (and we have) we see a tremendous emerging talent pool. The identification and leveraging of that talent- and bringing those marvelous viewpoints and sensibilities to the broadest audience-- that's where the value lies.

[deewa]

Why not try Bloglines.Bloglines is much better than newsgator. You can synchronize bloglines with blogbot for outlook. Folder hierarchy is synchronized between Outlook and Online via blogbot. It’s much better than newsgator between outlook and online.
If you like desktop news client, You can use Greatnews to synchronize bloglines like newsgator using feeddemon. Good news is Greatnews is a wonderful free software but feeddemon isn’t.Folder hierarchy is synchronized between Bloglines and Greatnews. Feeddemon doesn’t synchronize Folder hierarchy between newsgator online and itself. Greatnews can be found at :http://www.curiostudio.com/
If you like newsgator for outlook, don’t worry, blogbot does the same and better job for outlook. blogbot can be found at http://www.blogbot.com/out/.
Even you uses several computer, you won’t read the same news twice. cause it’s synchronized online, at outlook via blogbot, at desktop by greatnews.
Bloglines doesn’t offer a desktop service? That’s not true, check out Greatnews!