Access to Inventory

Here is a very simple way to think about the value of advertising on blogs.  About.com was acquired by the NY Times for $410 million at a multiple of over 10 times About's 2004 revenues and a multiple of over 30 times EBITDA.  Several analysts say there is a dearth of ad space inventory.  But of course it's more than that.  When you own or deal with a wholesale property you can work a sponsorship deal. 

Now consider blog inventory.  Unless its part of Weblogs.inc or Corante, you can't work that deal without significant transaction costs.  Like Denton's Sony deal for $25k/month.  This points to the opportunity, not only for aggregate micro-pubs -- but for a system where publishers aggregate themselves through commoditization.  How to value this inventory is another thing, however.

Comments

[Jason]

Well, anyone who is a hustler can get out there and sell... however, if you're spending 1/3rd of your time on tech and 1/3rd on selling you're only spending 1/3rd blogging.

When I modeled the blog publishing model 18 months ago, Brian and I realized there is no reason to do this if you can't get to 400-700 blogs in three years. We're at 75 blogs and will hit 200 this year.... that has been a huge amount of work, and I can't imagine how long it will take to get to 400-700 like About.com!!! Maybe five to eight years!

[Bill Seitz]

Is part of your framing that sponsorship is a better model than the Google AdWords type of model? If so, why do you think this is? Because Google's targeting isn't narrow enough? Or because when there's a good/tight fit between sponsor and content then you want a design that's "richer" than AdWords gets you? Or something else...

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