Blogonomics: Why Media Companies Will Buy Blogs

Jerry Abejo has revisited the idea of blog aquisitions, and doesn't really seem to get it. He's not only way off the mark factually (Gawker Media gets over 200 million pageviews a month, not 30 million), but he also seems to give far too much weight to people who for whatever reason don't want to buy blogs. Surely the relevant universe, however, is the smaller number of people who are willing to bid against each other to buy blogs - and Abejo doesn't seem to have talked to any of those.

Instead, he quotes Seth Alpert of AdMedia Partners, as well as one Russell Crafton, making very weak arguments indeed:

Alpert argues that blogs, in particular blog networks, may have trouble generating reader loyalty, a factor that may give pause to advertisers.

"It doesn't truly own the audience," Alpert says. "There's not a lot of proof that you could generate substantial advertising revenue through a blog network. Most of those companies are fairly small."

Although blogs like The Huffington Post operate as small newsrooms with a staff of rotating writers, many are tied to a singular voice and talent. This underscores the other most common argument against blog investments, that many of these sites are too closely tied to their authors.

"You'd have to see blogging sites offer more of a broader, online magazine approach, if you will," says Russell Crafton, a partner at boutique bank Redwood Capital, discussing an approach that might comfort possible investors. "Something like daily postings, news, thoughts, ideas, can get tons of traffic, but it's not really a sustainable business model beyond that individual," he adds. "There's a limited amount of time that people spend on a site like that."

The first part of Alpert's argument doesn't even make sense. Reader loyalty, owning the audience - blogs do that really well, thanks partly to the way that readers are forced to return regularly in order to participate in comments streams.

The second part might be more germane. Blogs are very small fish in the world of big media companies, and even a big blog network might well have difficulty moving the needle, to use the jargon. Then again, Gawker Media has more pageviews than all but the very largest US newspapers: 200 million pageviews a month is nothing to sneeze at, even if you're the New York Times. And Gawker Media today gets more visitors - and more valuable visitors - than About.com had when the NYT bought it for $410 million in 2005.

As for Crafton, he seems to be saying that a website with "tons of traffic" isn't going to be worth much unless and until it can increase the amount of time that the average reader spends on it. To which I say: Tell that to Google. Blogs generally work on the principle that the more you send people away the more they come back, which is something the likes of Russell Crafton seem to have enormous difficulty understanding. To this day, I have yet to find a single major media company which has non-advertising external links on its flagship homepage. But that will, inevitably, change. And when it does, newspaper and magazine websites are going to find it much easier to acquire those bloggy skills than to try to grow them in-house.