Tuesday, February 24, 2009

Media Deflation: How Valuable is a Blog?

One of the themes I hope to explore in this blog is the deflationary spiral that is crushing the value of media companies.

It's becoming clear, for example, that the digital versions of traditional media properties get monetized at a far lower rate than the existing businesses. The New York Times, for example, makes about 7 times more money from a subscriber to its newspaper than it does from a unique visitor to nytimes.com. A friend of mine who until recently ran the television business of a well-known public media company complained to me that "every business plan I got for our business was more or less a plan for a blog."

That's not an insult to blogs, it's an observation that most media companies are facing a future with far less revenue, more competition, and fewer employees than anything they have today.

Here's a list estimating the value of the 25 most valuable blogs/blog networks. The most valuable is Gawker, worth $170mm. Number 25 is barely worth $1mm. Perez Hilton, which is more or less the online equivalent of People Magazine (albeit much nastier) is #4 at $32MM, which is but a fraction of what People is worth even in today's market.

The list from last year had many of the same names and a range of values that was quite similar. basically many of the blogs had a lot more traffic this year but ad revenues per visitor have tended to decline to the net has been a wash.

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