24/7 Wall St has recently published a list of The Twenty-Five Most Valuable Blogs In America.
7 of the Top 25 most valuable blogs are tech blogs.
TechBlogs, as we all know, are an extremely competitive part of the online content business so it will be interesting to see how all that “Free Market” energy translates into Advertising Revenues and, more importantly, a return on Shareholder Investment.
Note: Important qualification. The top 7 most valuable tech blogs do not correlate with the 7 most popular tech blogs.
They estimate the annual advertising revenues and monthly traffic for each of these Top 7 Tech Blogs to be:
- 5. TechCrunch. $7.5 million. (4 million uniques / 18 Million Page Views)
- 9. Boing Boing. $4 million. (3 million uniques / 24 Million Page Views)
- 12. GigaOm. $2.8 million. (1.7 million uniques / 12 Million Page Views)
- 15. ReadWriteWeb. $2.4 million. (1.2 million uniques / 10 Million Page Views)
- 16. The Business Insider. $2 million (1.8 million uniques / 14 Million Page Views)
- 18. Apple Insider. $1.3 million.(1.2 Million uniques / 8 Million Page Views)
- 20. SearchEngineLand. $0.6 Million. (0.4 Million uniques / 3.5 Million Page Views)
Interestingly these figures indicate that the market leader is the least sticky (4.5 Page views per unique) while the 7th spot is the stickiest (8.75 pages per unique). You’ll notice is there is no correlation between revenues and traffic. I guess the question also has to be asked how many of these uniques end up visiting all 7 blogs each month?
The average revenue per unique per annum (ARPU) across the top 7 sites is just $1.55. It doesn’t get much better at the top of the market. ARPU across the top 3 is just $1.64. While top spot delivers an ARPU of just $1.875.
So that’s the revenue side. Now let’s take a look at what it cost to run a top 3 tech blog.
24/7 Wall St suggest you will need around 30+ staff to generate the volume of pages each day to keep the blog hot and the ads streaming. So let’s say for arguments sake you need 30 people and that fixed cost per staff member (including the equipment and associated operating costs) is $100,000 per annum. So that would be an estimated $3 Million per year in costs. This means 2 out of the top 3 may be making money.
Based on these estimates TechCrunch makes an operating profit of just $1.125 per unique per annum.
So let’s put this into perspective. There are an estimated 130 Million Blogs on the web of which about 8,500 are TechBlogs (at least based on Technorati’s listings) and of the top 3 tech blogs the ARPU is just $1.64 and the top operating profit is just $1.125 per unique per annum.
A couple of thoughts come to mind here. Not least of which is Chris Anderson’s Long Tail prediction for media: “The head of the curve will be free and the tail of the curve will be paid.”
Pardon the pun but I guess these figures make the business of profiting from blogging a Long Tale.
The other thought is this. Clearly blogging isn’t where they make their money.
So what do they do to make it work? Well SearchEngineLand, Gigaom and TechCrunch all have conference programs linked to the blog. For example, they estimate that SearchEngineLand’s conference revenues are 3-4 times that of the revenues generated by the site. So clearly the blog is just a Freemium hook to get new business in.
You may recall that in an earlier posting What If: Journalism is the real reason Newspapers are dying? I made reference to TechCrunch’s Michael Arrington and his mid-year post on What If: The New New York Times . In this post he redefines The New York Times online publish model in terms of the TechCrunch blog model.
Now let’s apply some MobCon theory to this whole Blogging Business and do a What If on the TechCrunch blog model.
What if: Instead of talking about iPhones TechCrunch went into business selling or even giving away iPhones to their 4 Million + readers? What would their revenue model look like then?
Well their ARPU would take a huge bounce. Up from $1.88 per annum to upwards of $800 per annum. Their margins would also improve.
They would grow their annual revenues from$7.5 Million to $3.2 Billion. This would make TechCrunch’s revenues slightly higher than the New York Times. Why shrink to greatness after all?
In Australian terms this would make TechCrunch a bigger mobile telecoms provider than the newly merged 3 Mobile and Vodafone Joint Venture.
Now let’s apply the same logic to the New York Times. What if they also became a mobile publishing company? Issuing iPhones, or any other brand of smart phone, to their online audience and print subscribers? What would it do to their revenue model?
The New York Times, whose online business in 2007 had an ARPU of $3.80, has 10x the traffic of TechCrunch so they would quadruple their revenues and solve the original New York Times10% Problem.
Just for the record: Estimates put The New York Times offline ARPU in 2007 at about $330. Hence the 10% Problem where 10 times the readers online delivers 1/10 the revenues.
[Update 1-1-2010] For the independent Blogger here is an excellent article on the business of blogging. Technorati: Full-time bloggers are making more money than ever (e.g. For full-time bloggers, the average revenue in a year is $122,222. For part-timers, annual income is $14,777. The average for the full and part-timers combined is $42,548.)
[Update 2-4-2010] You may also find Sonia Simone’s Why You Can’t Make Money Blogging a valuable counterpoint arguement
“I learned the hard way: while blogs can do many wonderful things, making huge amounts of money isn’t one of them.”
I also recomend reading The Economics of the Blogosphere:
“Perhaps blogging is simply a complex pyramid scheme…If you want to break into the system, you need to have your blog linked to. In order for that to happen, you need build up your own reputation by linking to other blogs yourself. However, all this does is firmly entrench the few blogs that earn money by making them more popular.”
Just to illustrate how long the Long Tail of Blogging really is I have created this graph from the ProBlogger questionaire data collected in a 2008 post on How Much Money Do Bloggers Make Blogging?
The Long Tail of Blogging
Reuter’s Felix Salmon recently took a look at the business model of one of the web’s leading Business Blogs. In his investigation of Business Insider he revealed that
- Ad revs for a business or premium site can run at $10-$20 [CPM], and
- the editorial output was estimated at 8.5 posts per person per day or between 20 – 40 posts per day.
[Update 22-8-2010] Another site worth investigating is Buyselladds. This site is an ad exchange that allows bloggers and advertisers to sell and buy display advertising on blogs. The onsite metrics allow you to compare traffic and rates with content.
[Updated 21-9-2010] The Way I Work: Michael Arrington of TechCrunch – the founder of the leading tech blog in the Wall St 24/7 list talks with inc.com.
[Updated 27-1-2011]
“You might make money from your blog in terms of business leads or by positioning yourself as the expert in your niche but there are huge blogs out there already who have far more traffic than you ever will and even they are not making much money from blogging.” – The Next Web
[Updated 15-2-2011]
“The alleged benefits that such publishers dangle before writers, he says — including increased traffic to the writer’s website, building a brand and enhancing reputation — don’t really come to pass in most cases.” – Content Farming: Is Online Media Just a Digital Sweatshop? GigaOm
[Updated 11-3-2011]
August 1st, 2011 → 12:44 pm
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