Blog Business

Online advertising spends continue to increase, and 2006 will be even stronger, according to ZDNet. Meanwhile, yahoo and others are experimenting with behavioural tracking to improve the relevance of ads served to surfers. Chris Garratt at performancing has some comment on this, including pondering why a black-hat technology when used by spyware is now seen as a good thing for the consumer. Of course, while this increases the potential revenue earned from ads, as a technology it doesn’t lead to a new revenue stream, unlike the old marketing-data model of the e-boom (though as some blogs are now requiring membership to comment, information about users can be easily gathered and fit to this model).

And in sort-of-related news, M$ are releasing a beta plug-in that will sort e-mail according to your relationship with the sender. This mix of tradtional e-systems with social network software is going to be a big area in the next few years (especially as people desperately attempt to find business models other than advertising for social network sites). The next generation of Outlook will also contain tagging capabilities. How could this help blog revenue? Certainly we’re at the point where tagging and related help engines suggest similar blogs, and build blog communities out of previously disparate sites. But that’s what blogging is about anyway. And, of course, similar ideas can run through bloglines and the other blogreaders, but surely there must be a proper business model (separate from bloody advertising) in this?

Jeremy Wright has published a rant (and then several responses) about the lack of scaleability in certain Web 2.0 type sites. This is a subject close to my heart as it’s a conversation I’m having with the developer of one of my projects (Wordpress to be scaled up or start with bespoke system). As is the way with these sort of rants, it was immediately followed by b5Media having uptime issues

There’s a survey of European web habits up at the eiaa site. And Blogherald, from where that last snippet comes, also reports that a MSN ad network is on the way. This is alongside the continuing expansion of the Yahoo network. It’s getting to be a crowded marketplace out there!

The NY Times is about to relaunch about.com, which is always mentioned as a blog network, though I can’t say I’ve ever seen it as such. It is, however, one of the biggest earners/users of Adsense. Meanwhile, their yearly online ad earnings are at $200 million. The MSM is still with us, it’s just moving online–hence don’t believe the blog ‘MSM is dead’ purists. They’re wrong.

Blog Media have relaunched the Blog Network List in a ‘classic web 2.0 mash-up stylee’ Should take a few hours to go through all that.

And Jupiter Research have a funny take on the recent Business Week story on MySpace. Where’s all the money going?

And more and more people are talking about the consultancy potential of being a successful blogger. Real business model or nice little earner on the side?

And Darren’s updated his classic ‘how bloggers make money’ post. This should be required reading for anyone starting in this business. But it requires a whole post to itself.

Talking about the Worstall Model, I mentioned that news stories could be favoured by the response of readers. This is, to some extent, what digg does. The next step will be to sign up to an agreement to syndicate those high-regard stories to other news agencies.

The Guardian launched its branded newspoint newsreader this week after testing it since January.

It offers .rss feeds with, wait for it, added advertising. As a result, it’s getting a severe kicking in the comments to the newsblog entry about it. As so many point out, if people have got adblockers, why would they allow another ad-system on to their desktops?

Darren Rowse has a piece on rules for blog start-ups. Most of it I’d agree completely with (he says as someone who doesn’t have much interest in sticking advertising on his sites!). It is, after all, about defining and developing a niche, taking advantage of revenue opportunities when they arise, and being flexible.

One point I would disagree with is the one about being user-centred. This ecrtainly seems (from slightly different angles) to have been what both Denton and Calacanis did–finding the niches and then setting up blogs to reflect what they believe they found there. It’s rather different to what John Battelle’s talked about, which starts with a very strong voice, agglomerates related voices and then sells the strengths of those individuals to advertisers.

Of course, Darren isn’t suggesting one shouldn’t have a strong voice, but most of Battelle’s blogs don’t fit the sort of niche you’d come up with by thinking about pleasing potential readers. They’ve not been produced using careful five forces analysis. They’ve come about through the passion of those involved. Sometimes being user-centric means leaping from area to area without finding a voice. Which means no-differentiation at all.

(edit, sorry, Darren is commenting on a post at Evan Williams’ site, and HIS bit about being user-centred is the Nielsen line on usability. No argument from this quarter (hey, look about you, does it look like I think things should be complicated?))

Over at his top-of-the-range BritBlog Tim Worstall (he’s got a book out y’know) has done some analysis of the Pajamas Media syndication model and found it wanting.

It comes down to a discussion of syndication. Syndication traditionally is the selling on of content. What Simon et al. have done is NOT syndication, it’s a federated model of content agglomeration intended to drive eyeballs to the site in order to charge higher fees for advertising (ie it’s a variation on the basic advertising model, albeit they’re offering fixed prices on the ad sales which should attract speculators). Currently it’s not far off a linklog with added essays (the VCs are probably wondering what on earth they invested in). As Worstall notes, how is this going to drive eyeballs to the site in an era of .rss readers (if you’ve already read Reynolds on instapundit, why go to pajamas and read him again?). At least the Brit equivalent, The Sharpener, has original work on it, alongside the pulled-out blog entries.

Nick Denton has produced a proper syndication model, of course, by selling some of his content through yahoo, to be syndicated through their feeds. Worstall proposes a variation on this, where the central site acts as a quality-filter of blog postings which are then sold on to the MSM. This is from the old world not unlike a literary agency model, providing material for sale (or feed) to the MSM in dead tree and online form.

the real model is Associated Press, the NY Times syndication service, Creators, UPI. Bloggers already create, every day, a volume of material that completely swamps the combined output of all of those together. Some of it is even worth reprinting for a wider audience.

It would certainly be a way of filling the op-ed pages.

Whether this can be viewed as a pureplay blog model or rather as another parasitic model (such as blog directories and search engines are) is open to question. There is also the thought that the quality control needn’t be wetware controlled, but rather run through something like the audioscrobbler recommendation engine, with number of links to a piece pushing it to the top of the syndication pile.

For the dissertation this will now be known as ‘The Worstall Model.’

(Edit–Kim du Toit also points out that the success of PJM/OSM could lead to the end of BlogAds (given the former’s advertising system is a direct competitor and members aren’t allowed to use the latter), which is hardly likely to make users of the latter happy. He calls it a Closed monopoly.)

Over at Hone Watson’s site, there’s a reaction to my previous post about splogs and business models, with a suggestion that the major problem is that splogging lacks the perquisite of sustainability.

I guess it all comes down to what one sees as a business model. Each individual splog can get closed down, but the overall revenue stream will remain. And, for the future, there will be ever more blog-hosts setting up, so whether the biggies (blogger, typepad, wordpress) clamp down becomes irrelevant. Will Google blogsearch be able to keep up with ever changing site-origins? I somehow doubt it. As with spam, I don’t doubt that Russian based sites will start to dominate and, for each one that gets knocked down, another will rise. It’s therefore a fairly efficient and sustainable business model. And, given the complete lack of success achieved against e-mail and IM spam, it’s not likel;y that it will be defeated.

It also begs the question of how we define splogging. The use of multiple inter-linked sites is commonplace in the worlds of Viagra, porn and other areas, and is condemned. But when a single publisher has multiple blogs (say, Weblogs Inc just as a for instance), all of which link to each other, isn’t the same trick being used? It would certainly help the SE ratings. Where do we draw the line?

An article over on MSNBC covers the rise of spam-blogs. Guess this is as valid a business model as any other!

By way of an article on performancing.com, I bring you a subscription based blog, RFID news with new entries for free and 60 days old + entries available at $99 per year.

Interestingly, as one of the commenters points out, single pages of the archives are available through google and other SEs, but you can’t use the links into archive space.

Comment on the business 2.0 blog about the return of monetized eyeballs with the sale of Weblogs Inc (and some of the response from Calacanis (and the original article is here). While I’m on Calacanis, he’s also recently posted some figures about the money he’s bringing in from adsense.

Blogherald mentions chitika is about to launch in the UK.

Performancing.com has launched with the promise to teach you how to make money from your blog. There’s a lot of frit, but some nice pieces of analysis, such as this on niche blogging and the consequent potential for revenue. Given they’re advertising all over the place, one assumes its a well-funded operation.

Pajamas media, now operating as Open Source Media is straggling along, though having had to return to their original name after a trademark dispute. Not sure if their concept of the ‘AP wire’ of the blog world will hold together. Still, after their raising of $3m or so of venture capital, it’s got a little while to sort itself out.

And a few articles in the MSM by way of paidcontent. The IHT covers traditional advertisers moving to new media (including blogs). The NY Times covers from a similar angle.

CNN.com (from Business 2.0) has an excellent overview of the latest developments in blogging business models.

Calacanis is talking about building a blog directory to promote to advertisers. In this sense, it woud be an aid to blogs advertisement selling, though other agencies such as BlogAds and AdBrite have both developed the directory model as a business model in its own right (though the latter sells ads top more than just blogs).

Alongside the expansion horizontally across numerous blogs (the publishing house business model), the notion of providing content for others is becoming increasingly favoured. Blogherald (amongst others) reports that Gawker, the daddys of blog publishing are licensing content to Yahoo. Not, as the report says, of porn blog fleshbot, but of more seemly missives.

It’s a sensible move forward of course, but how far it will detract from the uniqueness of the original blogs is open to question.

There’s an article over on clickz.com suggesting ‘proper’ advertising people are starting to take advertising on blogs seriously. It’s a terribly written piece, but it suggests that the bubble isn’t about to burst yet, and that the best blogs are likely to have even more opportunity for developing revenue.

Looks like probably the most succesful of solo bloggers, Andrew Sullivan, is giving up his publishing independence. He’s announced today that he’s to join the Time magazine site. It’s an interesting move from someone who, I’d argue, represented one of the major points of connection between blogosphere and MSM. Indeed, many of the classic blog ur-myths really rely on Sullivan’s involvement as having a foot in both camps.

Sullivan’s business model has always been to rely on donation drives rather than to be dominated by advertising (though it carries a couple of banners). Indeed, the Sullivan donation machine is highly sophisticated. The system asks for $20 from occasional readers and $50 from regulars, and alongside the ever present ‘tipping point’ page, there are regular drives (such as now, to celebrate the site’s fifth birthday).

Sullivan doesn’t say whether this suggests the donation model has failed, but certainly it won’t be as actively pursued under Time. Previous drives have raised $80,000 and more. The advertising and marketing machine will be much more dominant.

One more alternative model bites the dust?

…just what business model some of the majors are following. The current furore over the Sony installation of root-kit based DRM AND the unedifying EULA that acompanies it suggest such a contempt for the customer that one wonders how they hope to keep any on-side.

Of course, they assume that most won’t even notice/care, and they’ve now withdrawn the rootkit (though leaving in the other spyware). However, the EULA (below) demonstrates where the majors are intending to take control of ‘their product’. There is a desperate backs-to-the-wall feeling about this. An argument being re-run from the first days of the eight-track. What even those in Sony must realise is that the old controlled product release business model is on its last gasp. And what amazes is they’ve thought of nothing better than this desperate defence.

And the blogosphere has a field day.

EULA for Sony CDs ripped on to PCs, from the EFF.

1. If your house gets burgled, you have to delete all your music from your laptop when you get home. That’s because the EULA says that your rights to any copies terminate as soon as you no longer possess the original CD.

2. You can’t keep your music on any computers at work. The EULA only gives you the right to put copies on a “personal home computer system owned by you.”

3. If you move out of the country, you have to delete all your music. The EULA specifically forbids “export” outside the country where you reside.

4. You must install any and all updates, or else lose the music on your computer. The EULA immediately terminates if you fail to install any update. No more holding out on those hobble-ware downgrades masquerading as updates.

5. Sony-BMG can install and use backdoors in the copy protection software or media player to “enforce their rights” against you, at any time, without notice. And Sony-BMG disclaims any liability if this “self help” crashes your computer, exposes you to security risks, or any other harm.

6. The EULA says Sony-BMG will never be liable to you for more than $5.00. That’s right, no matter what happens, you can’t even get back what you paid for the CD.

7. If you file for bankruptcy, you have to delete all the music on your computer. Seriously.

8. You have no right to transfer the music on your computer, even along with the original CD.

9. Forget about using the music as a soundtrack for your latest family photo slideshow, or mash-ups, or sampling. The EULA forbids changing, altering, or make derivative works from the music on your computer.

As it says in the info page, this is intended as a site to discuss business models for/on blogs. It’ll probably also feature random-ish speculations about the future of the blogosphere, which will doubtless be wildly inaccurate.

Frankly, I was surprised the domain was still available–the other forms all seem to be parked. Thanks to Azeem Azeez for the devastatingly simple and beautiful Wordpress wrapper.