Cashing in on Weblogs

Major media companies are investing in blogs. Is this a new boom or just a bubble?


Back before he started single-handedly defending the U.S.-Mexican border, CNN personality Lou Dobbs was obsessed with an altogether different frontier: space.

Perhaps more accurately, Dobbs got momentarily wobbly at the sight of workaday schlubs on far lower rungs of the journalistic ladder becoming paper millionaires overnight by virtue of working for such now-forgotten webzines as Quokka Sports, Garden.com, and NextCard. So in June 1999, at the tail end of the last great dot-com bubble, Dobbs jumped headlong into Space.com. "I believe space is the most exciting and biggest news story of this year and of the next millennium," he gushed to The New York Times. "I'm fundamentally a journalist, and can't resist the biggest story."

Dobbs managed to locate his resistance within just 22 months, when the blockheaded business broadcaster crawled off the sinking, Nasdaq-battered spaceship back to CNN, joining such temporary online enthusiasts as APBnews' Sydney Schanberg, ForeignTV.com's Peter Arnett, and Contentville's Steven Brill. Once the funny money was gone, so too were the celebrity journalists.

Now they're back with a vengeance, and this time they're hitching their wagon to what was the lowliest of online life forms six years ago: weblogs. On May 9 (after this issue of reason goes to press), the world should see the debut of The Huffington Post (huffingtonpost.com), where political cocktail-party queen Arianna Huffington will orchestrate a group blog that threatens to feature 250 of the country's most wealthy and influential media figures: David Geffen, Walter Cronkite, Barry Diller, Warren Beatty, Mort Zuckerman, Nora Ephron, Norman Mailer, Brian Grazer, Jann Wenner, Norman Lear, Gary Hart, Tina Brown, and so on. Apparently, running Hollywood, Manhattan, and Washington, D.C., isn't satisfying enough; they want some of that hot blog buzz!

Besides celebrity bandwagon jumpers, Huffington is bringing to the scrappy blogosphere three hallmarks of a bubble mentality: media hype, staffing bloat (including offices on both coasts), and actual investment capital. Her financial partner, fittingly, is Kenneth Lerer, a former executive vice president of the Internet boom's last great hurrah, the company formerly known as AOL Time Warner. (After Nasdaq collapsed within months of that merger, the company's stock tanked, and now it is once again known as Time Warner. America Online has been demoted to a subset.)

The Huffington Post arrives in the midst of a great blog business explosion, with new revenue models, financial alliances, and media innovations being launched seemingly every day. And much of the action is coming from sectors that have long dragged their digital feet.

Both CNN and CNBC have recently launched features where they survey the daily blog chatter. Business Week's May 2 cover story, titled "Blogs Will Change Your Business," warned: "Your customers and rivals are figuring blogs out. Our advice: Catch up…or catch you later." Rupert Murdoch, once a blogophobe, devoted his April 13 speech to the annual American Society of Newspaper Editors convention to warning his fellow print dinosaurs that people who read and write blogs "want control over their media, instead of being controlled by it," and that unless newspapers "awaken to these changes, which are quite different to those of five or six years ago, we will, as an industry, be relegated to the status of also-rans." And the San Francisco radio station KYCY-AM, owned by Infinity Broadcasting, announced in April that starting May 16 it was moving to a format that would exclusively feature "podcasts"–essentially audio blog posts–from their listeners.

Besides the frenzied activity coming from the top down, the grassroots of the blogosphere are beginning to intertwine and sprout business plans of their own. On April 26 political bloggers Roger Simon (rogerlsimon.com) and Marc Danziger (windsofchange.net) announced Pajamas Media, a two-pronged company that will first develop an advertising network across at least 220 blogs. (The participating sites deliver an aggregate 3 million page views a month, according to Simon's rough estimate.) This will then help pay for a vague but ambitious Blogging News Service, a global press agency of sorts whose key editorial staff is slated to include such popular right-leaning bloggers as InstaPundit's Glenn Reynolds, Little Green Footballs' Charles Johnson, talk show host Hugh Hewitt (hughhewitt.com), and Australian columnist Tim Blair (timblair.net).

Pajamas Media was named after a famous crack by then?CBS executive Jonathan Klein, who, in the midst of the blog-fueled Dan Rather memo scandal, dismissed the typical blogger as "a guy sitting in his living room in his pajamas writing what he thinks." The company is being represented to venture capitalists by the noted Silicon Valley investment guru Tim Oren. Like The Huffington Post, the new company takes blogging from pajamas to the three-piece suit, from the one-man gang to an alliance of hundreds.

On a smaller scale, this trend has already been playing out for years in another corner of the Internet: baseball sites. Analytical online publications such as Baseball Prospectus and The Hardball Times have long pooled the talents of some of the best amateur writers and created successful non-advertising-based products, including annual books and fee-based content. This spring several new rounds of baseball-blog consolidation occurred, including one started by Markos Moulitsas, better known to the world of political blogging as the man behind Daily Kos.

Moulitsas announced a new company called SportsBlogs on March 21, initially featuring a dozen revenue-sharing baseball blogs, though he hopes to expand the group to cover NASCAR, tennis, and other sports. Other recently launched baseball networks include Baseball Toaster and the Most Valuable Network.

Add to this the 12 blogs run by Gawker Media's Nick Denton (who made a bushel during the last dot-com boom) and the 75 managed by Weblogs Inc.'s Jason Calacanis (who, as impresario of the now-defunct Silicon Alley Reporter, was one of the biggest inflators of the last Internet bubble). Throw in various online publications such as NewWest that combine blogging with regional news gathering. A rich variety of weblog business models have sprung up seemingly overnight.

So is the age of blog consolidation and overheated valuations upon us? Is the individual, idiosyncratic voice that helped make blogs so different now a thing of the past?

I wouldn't count on it. Moulitsas, for instance, is only able to fund his SportsBlog network because of his huge (400,000 page views a day) and intensely loyal partisan audience, which responds to his acerbic, distinctive lefty voice and enables him to make a good living selling advertisements through BlogAds.

Already, according to BlogAds founder Henry Copeland, "nearly a dozen bloggers made more than my salary last year selling BlogAds." That list, which he hopes will reach 100 in 2007, includes many people who are now using the cash (or inspiration) to build these new blog businesses. And BlogAds is just one of many income streams available to the individual writer: Google offers a variety of advertising products (mostly display boxes and keywords); many bloggers raise money by asking for donations or "subscriptions"; Amazon.com has a referral system that can bring in a few shekels; and the 1,000-pound gorilla, Microsoft, is getting into the blogging biz through a service called Spaces.

So while money and talent pour into schemes to compound and monetize blogs, it has never been easier to scratch out at least a subsistence going it alone. Don't be surprised if some of those simple, one-man operations end up outlasting their bigger, buzz-drunk kin.

Injecting layers of staffing, overhead, and investment capital will certainly create some interesting experiments and hilarious hype–at least until the next bubble bursts–but one revolutionary and empowering fact remains: Blogs, in the words BuzzMachine's Jeff Jarvis, will continue to be "history's cheapest publishing system with the world's cheapest distribution system." Not even Arianna Huffington can mess that up.