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Blogs finally get business savvy
Flurry of big deals in recent weeks provide many new ways for Web logs to turn a profit.
November 23, 2005: 10:14 AM EST
By Greg Lindsay, Business 2.0
Power slacking on the job
Survey: Workers waste more time than employers expect, costing companies $759 billion a year.(full story)

NEW YORK (Business 2.0) - It can't be said anymore that blogging isn't a business. The problem now may be that blogging has too many business models to choose from.

Andrew Sullivan kicked things off by announcing he would soon decamp with his proto-blog to Time.com. That was followed in short order by the launch of Open Source Media, then the confusion over whether Gawker Media had finally sold out, in this case to Yahoo!, or had merely licensed some of its best known bloggers in exchange for a healthy dose of traffic.

After all the press releases had hit the wires, the usual suspects chimed in: Former Advance Newspapers' Internet chief and New York Times consultant Jeff Jarvis railed that Time.com doesn't get it; Media news site PaidContent.org heard from Yahoo's news and finance chief Scott Moore; and Jason Calacanis, who cashed out last month to AOL, wholeheartedly agreed with Moore. Still with us?

Buried under the flurry of comments and back-scratching were easily a half-dozen different business models, including one that may turn out to be one of the biggest opportunities of all -- although it went virtually unnoticed by the mutual admiration society because it involves print.

But let's recap before we get ahead of ourselves.

Based on all the possibilities, blogging business model options include:

Selling out to and joining mainstream media. This is what Andrew Sullivan did. Although "selling out" in this instance means handing over the technical headaches of operating his site to Time.com while retaining editorial control and accepting a regular paycheck.

"Andrew Sullivan," the brand is subsumed into Time.com's, bolstering the latter.

"I like to think of it as a moment when the blogosphere and the (mainstream media) made touchdown," Sullivan told PaidContent.

Selling out while staying independent. Calacanis has managed to do this with Weblogs Inc. since selling his company to AOL last month for a reported $25 million.

"The things that have changed are all on the backend," he wrote in the aftermath of Gawker's Yahoo (Research) deal. "With AOL's support we can hire more bloggers, promote the blogs, sell more advertising, and ultimately pay bloggers more money. That's the basic concept behind the deal: scaling the business."

AOL gained a fresh portfolio of brands and a geyser of traffic against which to sell ads. The synergies are invisible.

Syndicate and partner while holding fast to the brands. Nick Denton at Gawker Media is building brands. To that end, he turned to syndication -- first with VNU overseas and now Yahoo -- to bolster traffic and penetrate the mainstream without selling out.

The Blog Conglomerate (the Federated Model). This is John Battelle's approach. His soon-to-launch FM Publishing network will combine the brand-oriented aspect of Denton's approach with Calacanis' focus on back-end synergies. FM Publishing will become the hub for a loose conglomerate of A-list bloggers whose combined traffic will start to reach a critical mass. But there are no editorial synergies between the diffuse blogs in the portfolio.

The Blog Conglomerate (the Supergroup Model). Open Source Media launched last week with a supergroup lineup of conservative bloggers with a few wildcards thrown in.

Greeted with a resounding "who cares?" by the blogosphere, Open Source Media hasn't demonstrated any ability in its short life to meld the individual voices of its stars into a compelling, unified voice that justifies the umbrella site's existence.

Whether that's a failure of OSM's premise of its execution remains to be seen.

The Huffington Post -- which OSM has measured itself against since its formation -- succeeded by bringing non-bloggers into its tent. Why should you read Glenn Reynolds at OSM.org when you've already read him at Instapundit?

Fit to print? The last addition to this list is a blogger federation that harvests its best thoughts, jokes and criticisms for recombination in another medium. Rather than build a business on the back of a hub site, why not have a team of editors painlessly extract and repurpose the collective intelligence of a blogging network in exchange for final approval and a share of the profits? Imagine an editorial supply chain where content begins life in a blog and is then reprocessed as needed by new layers of editors, producers, etc.

To an extent, Yahoo has done just that with Gawker's syndication (and about a billion other sources). But why stop at recombining them within another Web site? Why not a magazine? Or any other medium that advertisers are willing to pay for?

As it happens, that's exactly what Tony Perkins has done with Always On, where the repurposed punditry of his techie members has spawned a 100,000-circulation quarterly magazine aimed at an audience that missed reading it the first time.

Last week's final announcement, the one that was lost in the flurry, was Perkins' admission and boast that Always On will reach $2 million in sales this year, with a profit margin of 25 percent. The magazine is still an appendage of the site ("advertisers get more real estate, and it's a cross-promotional tool") but Perkins hopes to double sales and boost his margins next year with a 50-50 split between events and advertising. And he's willing to sell 50 percent of his company to do it.

Yes, blogging is a business. The only question is, which kind?

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Gawker blogs get Yahoo! distribution deal. Click here.

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