How Blogging Is Turning In To Big Business

Blogging May 27, 2011 5 Comments

When you say the word blogging to non technical people the word itself tends to have a bit of a stigma attached to it. People think of techie people sitting in their basements hunched over a computer writing about obscure topics. That image couldn’t be further from the truth as blogs are turning in to big business and changing in front of our eyes in to what are effectively small media empires. While there is no doubt that personal blogging has been hit hard by the rise of social media and sites like Twitter and Facebook it’s the professional blogs that have started thriving and a lot of that has to do with the rise of social media and the fractures appearing within traditional media. Starting a blog has never been easier and distribution (getting traffic to the blog) has been accelerated with the rise of social sharing tools like Facebook and Twitter. Add in teams of professional writers being paid by proper financial backing and you have the recipe for a thriving sector and a whole new era of blogging…

Starting A Media Empire From Your Bedroom

In the old days (10+ years ago) you would need some serious backing to start a publication of any significant size. You needed to either physically print your own or you could have invested in a professional website which still cost a lot of money in those days. Now anybody can have their own professional looking blog live within less than an hour. The technology has decreased the barriers to entry and Mashable has to be the best example of that going from a small bedroom in a remote Scottish town to a media powerhouse in less than 5 years with many claiming it could sell soon for $50+ million. Most blogs start with a strong individual personality behind them but they soon evolve as the revenue starts pouring in and they hire teams of professional writers to expand their content offering. The writing and content is key in the early days but the barriers to entry and costs are minimal.

$5 Million + From A Conference

It’s hard for a blog to make serious money on page views alone. Ads do help with revenue but the Internet is a very competitive space and the valuation of these blogs would be far lower if they relied on ads alone. What blogs can do is leverage the massive online appeal that they have and bring their brand in to the real world using conferences. Just this week Techcrunch Disrupt was held in New York where 2200 attendees paid between $2/3000 per ticket. When you add in sponsorships and other deals you are looking at one conference generating between $5 and $10 million in revenue. It’s the huge brand appeal and loyal readership that blogs have that is attracting companies to buy them and when you think there could be multiple conferences per year that is a serious business you are talking about.

Sample ticket prices for the Techcrunch Disrupt conference

Blogs Raising Venture Capital

I never thought I’d see the day where venture capital was being invested in to blogs but that is exactly what we saw this week with $6 million getting pumped in to one of my favorite blogs Gigaom in a second round of funding. If people are investing that amount of money it’s because they are betting that they will get more out on the other end after any potential sale so investors are piling in to the space. In terms of an investment it’s really just an investment in people because there is no proprietary technology that any of these blogs have and anybody could set up the software that they have for free.

Blogs Selling For Huge Money

Two of the biggest examples of late have been Techcrunch and The Huffington Post which have sold for $40 and $340 million respectively to AOL. It’s part of a larger strategy by AOL to move in to content and they haven’t ruled out more purchases as they seek to tap in to the huge potential of blogs. Even Inside Networks was bought for $14 recently which were a series of blogs that focused on Facebook and social networking and that price looks impressive when you consider they had taken no investment and reported on the more niche subject of social networking. You can expect this trend of blogs getting snapped up to continue as old media wakes up to the potential of these sites and acquires more of them across all the different verticles.
Arrianna Huffington Sold her blog for over $300 million to AOL

Are These Actually Blogs?

I have to say that my own feeling on the matter is that none of the above are actually blogs any longer. They may technically be blogs but with groups of professional writers dotted all over the world and professional sales teams and designers these are in fact small media empires. Blogging software has leveled the playing field which means that anybody with an Internet connection and a WordPress account can create a significant blog. Social tools are helping these blogs get an audience quicker than they ever could have before and traditional media are facing serious competition across every sector from the bottom up. I personally think it’s great that anybody can create their own media empire and think more people should be jumping in to the space.

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