Thursday October 06, 2005
Weblogs Inc. turns exploitation apparatus over to AOL
The big news today is that Jason Calacanis’ Weblogs Inc. has sold its network of blogs to AOL for somewhere between $20 million and $35 million. As Paid Content reports, that’s a pretty generous price no matter how you figure it. Weblogs Inc. reportedly brings in about $2 million/year. That’s not that much, even considering the keystone of any blog network’s business model—creating lots of content for next to nothing.
Weblogs Inc. reportedly has 130 bloggers. The base pay package is around $500/month for 125 posts, plus the possibility of bonuses based on traffic. (Disclosure: I once considered blogging for Weblogs Inc.) Supposing everyone makes only the base—and many surely make more—that comes to $780k. Add 15 fulltime employees at a lowball estimate of $600k and miscellaneous overhead and it becomes pretty clear that Weblogs Inc. is probably not turning a profit, at least not a very large one.
And the key to the company coming even close to profitability is bloggers who are willing to work for $4 a post. Even the very worst freelance markets—and I’m talking shoppers here—would be ashamed to pay less than 10 cents a word, yet Weblogs Inc. pays pennies. How long can that last, particularly now that Weblogs has been bought? It might be fun to parlay a hobby into a little folding money for a funky startup, but for AOL?
The biggest challenge facing the various blog networks might not be waiting for ad revenue, but keeping blogger compensation way, way down. As Weblogs rival Nick Denton (who I also once kicked blog ideas around with) observed today, “The whole point about blogs is that they’re not part of big media. Consolidation defeats the purpose. It’s way too early. Like a decade too early.” But will able contributors really work for peanuts—on posts they don’t even get to sign (presumably so they can be easily replaced, as they often are)—for another decade? Denton, Calacanis—and now, AOL—seem to be counting on it.
Posted by jim at 02:41 PM ||