AOL pays anywhere from $15 million to $25 million for Weblogs Inc., a network of 85 sites. What does this mean, exactly, you hoo blogger?
PaidContent.org reports that Weblogs annual revenue may be about $2 million a year. AOL’s purchase price – many multiples above the gross revenue — is a big bet on the future of blogs.
Weblogs properties, such as Engadget, aren’t worth millions of dollars alone. The value is in the network. The Network.
Weblogs is a top-down network, as I understand it — most of the blogs were created after the company was formed. Weblogs Inc. solicited ideas for blogs on its Web site.
Will this sale prompt established bloggers to form bottom-up networks — merge existing blogs and build them out?
Will AOL rivals buy up the rights to independent blogs and assemble networks that way?
Or will media firms clone the best concepts and ideas generated by independent bloggers and assemble fresh brands?
Regardless, this sale moves blogging solidly into version 2.0. The 1.0 version was the great awakening thanks to the presidential election. Now that blogs have readers, the commercialization begins on a large scale.
And if I were to place bets on the next big move among bloggers, it will be in the direction of collaboration, consolidation — more intensive traffic building strategies which take more people — and networks. If the value is in the network, bloggers with a taste for profits will build networks.
Sometimes, when companies are bought the new owners sell off divisions to unpack value for shareholders. But in the case of Weblogs, the message here is that the sum is worth more than parts.
Start adding.
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Article comments
1 - Phillip Winn
So far all speculation on what AOL found so valuable about Weblogs Inc is just that -- speculation. My theory is that there were two pieces that AOL wanted badly: the custom-written software used by Weblogs Inc properties (think "competitive advantage"), and the expertise/brain power of the people at the top.
But hey -- that's just my guess.
2 - Washington Cube
KOB Krocks. He rocks, too.
3 - Cerulean
$2 million a year revenue? 15-20 million. Eric and Phillip, are you holding out on us? Are we going to be purchased next?
I don't see what was so valuable from what I've seen of blogs. Haven't seen those particular ones but I find it hard to believe that any group of blogs brings in the kind of income. Maybe this is like the tech bubble where they bought stuff just because of the buzz.
4 - kob
Phillip, I don't think it's speculation. AOL buying a successful start-up with some good brands, increasing revenue and apparently good management.
The only real question, in my mind, is the amount paid for it.
Regarding custom written software being responsible somehow -- I can't imagine. These are commodity products. It's Pepsi vs. Coke; not a Napster-type operation that developed as a result of its peer-to-peer software.
Weblogs is growing because of its traffic building content, marketing and overall business model, IMHO.
5 - Cerulean
"Weblogs is growing because of its traffic building content, marketing and overall business model, IMHO."
Well yeah, if it actually brings in two million in revenue which I find hard to believe. Still looks more like the internet bubble than anything to me.
6 - fisk
Looks to me like a few jokers at the top are making all the moola off the sweat equity of a few bloggers.
It's the great American dream come true.
7 - Eric Berlin
I think it's late '90s dot-com speculation all over again... which means there will be big winners and losers and an overall shakeout. The good news is that blogging is so egalitarian -- the people who enjoy it will continue to blog and people will find their way to them and audiences will build accordingly. At the same time, though, it looks as though we're going to see movement of big time money and media into the blogging world, and there will be more and more overlap. I see all of this as inevitable and with both positive and negative consequences.
Very nice job on this, KOB. Please provide links to the stories you're referencing in the future.
8 - fisk
Eric and Phil are licking their chops as we speak.