Technology Review recently published a piece on the business of blogging that focused on Jason McCabe Calacanis, chief executive of Weblogs, Inc. Since launching Weblogs in January 2004, Calacanis and his partner, Brian Alvey, have built a network of 80 blogs. I have extracted some germane points, given my focus on business models, but by all means read the original to get the full story.
According to Tech Review, Calacanis and Alvey decided it might be impossible to scale up a blog. The style is so personal how could you add a second voice? And without additional voices, how many blogs could hope to get the hundreds of thousands of page-views per month necessary to generate real advertising revenues? So, writes author Andrew Madden, their solution “was to assemble a large network of bloggers who together would generate a river of traffic.”
Tech Review goes on to note that Weblogs generates upwards of $1,000 a day in Google Adsense revenues alone, and broke the $2,000 a day barrier in May. The article quotes Calacanis, writing in his own blog, as saying that the AdSense revenues flowing in remain “much, much less than we write to our team in checks every month (think 75+ bloggers and 10 full-time staff.” (The article goes on to say that most Webloggers are writers-for-hire averaging $500 to $600 a month, rather than people with an ownership interest in their blog, the notable exception being Peter Rojas, principal of Engadet.)
Here is a revealing section, quoted directly from Tech Review: “According to Calacanis, the majority of the company’s revenues come from direct ads, which currently command a CPM rate (cost per 1,000 impressions) of between $4 and $12, whereas network ads generate between $1 and $4 CPM … (but Calacanis says) … to pique a direct advertiser’s interest, a blog’s traffic must exceed one million page views per month.”
Network ads equate to Google AdSense and its rivals. Direct advertisers are sponsors who are sold on the site, much as advertisers today buy newspapers, radio or television. The way I read Calacanis’s blog entry, and the Tech Review article together, while Google revenues aren’t covering all of Weblogs’ expenses, the firm is earning more money from direct sales anyway. So is Weblogs profitable? My guess would be yes.
So while it’s been said that content is king in this new media world, I think sales remains emperor for life — and that the winner will always be the team with the best salesforce.
(Note: I recently blogged about a new network being launched by John Battelle, and made reference to Calacanis is a previous posting some time ago.)
‘Cause if you ain’t Mass Media, you’re Mini Media