« The Future of Political Blogging: 6 Predictions | Main | Use Value: The "Money Shot" in Syndicated Content? »

The Blogging Business Gets Real (or, Will the Real Jason Calacanis Please Stand Up?)

Here's the first of two key indicators that tell you when an emerging Internet phenomenon is getting past the early hype phase and moving toward becoming a serious revenue-producing business sector: mergers and acquisitions are starting to be based on reasonable valuations.

This week's announcement that giant AOL (predictions of it's Web-inspired death in 1994 appear to have been premature) would buy Jason Calacanis' Weblogs, Inc for $25 million in an all-cash transaction is a case in point.

Earlier this year, the New York Times paid a staggering $410 million dollars for the psuedo blog aggregator About.com. That represented an outlay of $830,000 for each of About.com's anemic 490 blogs.

AOL, however, is paying only $294,000 for each of Weblogs, Inc.'s far-more robust and highly-trafficked sites.

Similar "rationalization" is happening in other M&A; activity in the blog sector.

Interestingly, when I interviewed Jason Calacanis last fall for my book, he pooh-poohed the whole idea that Weblogs, Inc. could become a serious revenue-producing enterprise in any near future. Here's an excerpt from the transcript:

KLINE: You've made comments in the press lately that suggest you're not really sure there's a real business in blogging -- or at least you're not sure how big a business it will be -- and yet you're a blog entrepreneur?

CALACANIS: I don’t see why that’s controversial.

KLINE: No one is saying it's controversial. But it is interesting to see someone in your position trying to damp down some of the hype around blogging.

CALACANIS: Well, the hype has been pretty impossible lately. There has been far more attention paid to the weblogs than is actually healthy. I mean, people need to remember that [few if any] of today's weblogs approach the audience that Matt Drudge has. And even Matt Drudge himself, although he has a substantial audience, it’s still a relatively modest business. It’s just him and one other person. It gives him a good living and that one other person probably a decent salary.

KLINE: But aren't the advertising possibilities with weblogs pretty lucrative, especially the possibility of targeting the "influencers" in society?

CALACANIS: In theory, yes. But a lot of people who theorize about marketing don’t have much contact with the way that media buyers actually work. And most media buyers, at least for the larger advertisers, aren’t even going to look at any site unless it’s got five million unique visitors a month, regardless of how "influential" its audience is.

Conclusion? Despite Calacanis' modesty (or was was it just a savvy pretense of "realism"?), it appears that media investors' fear of losing out on "the next big thing" is being replaced by more solid financial reasoning.

Next week: The 2nd key indicator of when a new business gets real.

Can you guess what it is?


TrackBack URL for this entry:

Listed below are links to weblogs that reference The Blogging Business Gets Real (or, Will the Real Jason Calacanis Please Stand Up?):

» Even I can see the future arriving. from Perceptric Forum

Blog networks became big business this week. It was a seismic shift in media. Weblogs Inc was soldsold<...

[Read More]


It's good to see AOL finally waking up. They missed out on some major deals. They should have gone after Skype, and they should embrace podcasting.

The AOL model has to be one of innovation if it is to exist. It is no longer an ISP for the most part. Aol for broadband is going ot have to acquire software and embrace new media in order to keep subscribers.

Aol radio is good, and the deal to carry some XM stations is good too. They should look into the online movie scene as well. Incorporate a move link type service into the Aol software!

Blogs are here and right now Google is king since they bought blogger. I don't see Aol really infliltrating the market that goole is in and taking any ad money from them either.

True, AOL is lagging as a platform for blogging. But I'd only add one word of caution: AOL has been underestimated many times before.

After taking part in a senseless moral attack on your fellow bloggers, with "Mr. Fair-and-Balanced" Bill O'Reilly, how can you even stand to post anymore? Shame, shame, shame.

Post a comment