As blogs flourish, media titans scramble for a slice of the pie

As blogs flourish, media titans scramble for a slice of the pie
November 7, 2005

Web logs -- blogs, for short -- used to be written off as amateur ramblings. But now there are 21 million blog sites on the Internet and the volume of material is roughly doubling every five months, according to blog search company Technorati.

Both Yahoo and Google have finally caught on and launched blog search engines. And media companies are paying top dollar for footholds in the blog world. Time Warner's AOL, for example, has bought Weblogs, a publishing consortium of 100 bloggers, for a reported $25 million.

That valuation -- if true -- looks steep. Weblogs is valuable because some of its blogspots, such as Engadget, get lots of hits, which means it can make money from Internet advertising.

But the company itself admits it makes only around $3,000 a day by publishing ads through Google's Adsense program. So it probably rakes in up to $1 million a year. That implies Weblogs could be valued at 25 times sales, or double even Google's own extraordinary rate of 13 times.

Blogs are converging with media mainstream. But could they ultimately eclipse it? The statistics look a bit ominous for some of the traditional giants. Blogs like Boing Boing get more hits than USA Today, according to Technorati.

One of the reasons blogs have flourished is that news has become a commodity on the Internet. Analysis and opinion have become more important. But blogs have their limits. The production values are uneven: Some are professionally edited, while others are rambling collections of ephemera.

Newspaper sites such as the Washington Post or the Financial Times have employed an "if you can't beat 'em, join 'em" approach by launching their own in-house blogs. It's hard to see these succeeding. The whole point of a blog is that it is supposed to be independent and personal. The best approach for the papers is to try to lure back readers by sharpening their own content.