Yesterday, BubbleGeneration’s Umair Haque set off a storm by suggesting that tech blog networks are peaking. I agree that the signal-to-noise ratio in the technology blog network space has gone down considerably. While many of these blogs are hiring from traditional media, established publications are firing back with their own blogs and blog networks. CNET for one has been very aggressive, even appointing blogger Dan Farber to become editor in chief at News.com (of course, Farber is so much more than a mere blogger).
In fact, in the past year, many of these technology blogs have gone from being a one-site, one-man operation to a multi-site property hiring large operational and editorial teams. In a few instances, companies have even raised considerable funding. The quest to build an audience and generate ad revenues has pitted many of these sites in a competitive and cooperative dynamic that might indeed suggest that most of these sites have peaked.
Due to the entrepreneurial nature of the people involved, I doubt that these sites will disappear. Given the shift of ad dollars and audiences online, I am sure they won’t.
However, clearly many of them will have to reinvent themselves and adopt new strategies to remain relevant. Let’s face it, particularly since Gabe Rivera unleashed Techmeme.com, a lot of the content being published on many of these sites has become a carbon copy of one another.
This is commonplace: at the beginning of the 20th century, America had hundreds of car companies; by the end of the century, there were three major ones. The point is, expect considerable competition to give way to consolidation, transformation and inevitably, extinction.
Before we get death threats, bear in mind that there are are hundreds of blogs networks and millions of blogs. No human being or team can go through all worthy networks. By all means suggest blogs and networks that you read, recommend and respect in the comments.
In this first post, we look at technology-oriented blog networks OR funded blog sites on the cusp of launching networks. We run them down and assess their strengths, weaknesses and long term prospects.
8 - Silicon Alley Insider
It’s hard to compile such a list and not give Silicon Alley Insider its fair share of credit. Self-proclaimed “disgraced stock analyst” Henry Blodget came out of his hibernation on Internet Outsider. Proving that everyone was into open sourcing everything these days, Blodget took his signature research and sensationalist style and unleashed a free blog with a lot of potential.
But it wasn’t until he teamed up with former Doubleclick CEO Kevin Ryan and former DoubleClick CTO Dwight Merriman to launch Silicon Alley Insider that Blodget was back with a vengeance.
In less than a year, Blodget has leveraged the name and skills that made him the world’s highest profile - and arguably highest paid - analyst into a site that has injected a much-needed dose of strategy, analysis and East Coast perspective to the landscape.
- Tale of the tape:
According to Federated Media, John Battelle’s company that represents advertising inventory on many of these sites, SAI does 1,160,000 pageviews.
- From being a one-man shop to an actual company:
Blodget remains the star of the show, for sure, but he deserves credit for lining up some interesting writers, including Forbes technology writers Peter Kafka and Dan Frommer, as well as .
We have personally been very bullish on SAI from the beginning for no other reason that its mission of “serving as the voice and resource for the wider digital business community, SAI covers the intersection of the technology, media and communications industries” is awfully akin to our own desire to go beyond covering the latest widget launch and instead offer readers analysis that sits on the crossroads of Main Street, Madison Avenue, Wall Street and Silicon Valley (pardon our shameless plug and delusional sense of grandeur, by the way, but the similarity is considerable, no?).
Judging by the second part of its mandate: “with a particular focus on companies and people making waves in New York,” SAI has joined Allen Stern’s Center Networks with excellent NY-focused coverage. In fact, the two sites are very complementary in that Center Networks has more of a technology skew while SAI covers finance and advertising a bit more. Combine the two and there’s a reason the city was named twice.
- From property to network:
While SAI remains a one-site media company, make no mistake about it, SAI is ambitious and planning much more, as evidenced by its hiring page. We are thus including SAI on this list, because very much like Venture Beat that has raised funding, despite being a one-site pony, this dark horse has a lot of upside and the wherewithal to give existing blog networks a run for its money.
- Focus: mass vs. niche:
Time will tell just how much SAI will evolve. But being based in NYC, the opportunities are endless. We presume the company’s focus will remain on business, but the applications therein remain interesting.
- Long term business opportunities:
Blodget has already lined up online video via regular appearances on Yahoo!’s Tech Ticker. This might explain Blodget’s cheerleader role for the troubled media company, but the fact remains, of all of these companies, this affiliation does give Blodget and by extension SAI an edge in online video even though SAI does not own any of the IP of the Tech Ticket video library. Whether or not Yahoo!’s Tech Ticker will go anywhere, time will tell… but Blodget’s double-edged star status and brand name will open up doors for the company.
- Revenue potential:
While SAI’s revenue potential remains interesting by virtue of being based in NYC (capital of advertising world), we see SAI far more as a play for influence and authority than a pure money grab.
We must say, given that SAI is based in NYC, we’re somewhat baffled by their choice to go with Federated Media, though we presume that the arrangement is for West Coast representation, mainly.
- The traditional publisher it reminds me most of is…:
Forbes (SAI 100, SA 25 etc.).
- Exits:
Business Week, Forbes, CNET, TheStreet.com. I do see SAI as a consolidator of some of the other blogs out there, for sure.
7- Read Write Web
- From being a one-man shop to an actual company:
To his credit, McManus gets top grades for bringing in new writers who all are knowledgeable in the space, Marshall Kirkpatrick, Josh Katone and Alex Iskold are all extremely insightful in their own right, and network writers Steve O’Hear and company all know their categories. O’Hear produced the documentary In Search of the Valley which chronicles Silicon Valley’s origins and provides a fantastic overview into what makes the Valley so unique and legendary. Kirkpatrick built a loyal following on Tech Crunch before venturing into a PR role at Splash Cast before being lured by McManus.
- From property to network:
- Focus: mass vs. niche
- Long term business opportunities:
Clearly it is smarter to have publications covering video and search, but I wonder how popular those will ever become relative to RRW. Regardless, he has developed a good base of writers, a stellar reputation and been around long enough to be able to survive any ups and downs. I do not think that McManus should over extend himself and reach dozens of blogs, however, he needs to ensure that online video and search are as strong as the weakest links in competing tech blogs spin-offs (which compete with RRW, basically).
As an intangible, the company should be able to create conferences in South Asia and the Pacific and be able to generate enough interest from Europeans and North Americans looking for an opening in the market, sort of like a bridge between East and West.
In fact, McManus’ home base gives him a leg up on the other blogs (when news comes out late at night or overnight in North Ameirca, it’s the middle of the day down under).
- Revenue potential:
Due to the proximity to Asia, pretty decent. But as a tech blog network, it needs to articulate what advertisers get over the competition. That remains a challenge given its size.
- The traditional publisher it reminds me most is…:
6- Venture Beat
- About the Founder:
Venture Beat is not a blog network (at least to the best of our knowledge) but having raised $320,000 in angel funding from a powerhouse roster of investors that includes ex-Googlers Georges Harik and Aydin Senkut, Mike Brown (Foundation Capital), MHS Capital, Amidzad and the White Sand Group, it certainly should be included in the landscape of professional blog networks, regardless of whether it goes from being one site to a network of sites.
VB was founded by Matt Marshall, who covered venture capital for the San Jose Mercury News until he left in September 2006 to launch VentureBeat as an independent company. The site was initially called SiliconBeat but has expanded to cover more financing news, hence the change in moniker.
A PhD in Government and an MA in German and European Studies from Georgetown University, Matt was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 through 1998. In 1999 he wrote a book while in Germany, “The Bank: the Birth of Europe’s Central Bank and the Rebirth of European Power” (published by Random House, 1999). He has also written for the Washington Post and several other publications.
- From being a one-man shop to an actual company:
Marshall bootstrapped the company early on and remained the site’s voice, but he did hire interesting writers such as Eric Eldon and recently lured Dean Takahashi of the Mercury News (along with his $120,000 annual salary) thanks in part to that $320,000 funding round.
- From property to network:
Unlike the other networks, VB has focused on financings and we think this razor sharp focus will help Marshall remain differentiated. Yes, in the short term he might not get the kind of advertisers that might land on other networks, but the truth is that most of those deals are coming from Federated Media (so they are being sliced up considerably as is) and he is better off becoming the “must-buy” site for professional services firms (law, accounting, VC firms) and select companies instead of fighting for the pieces in technology like the others do.
- Focus: mass vs. niche:
It should be noted that VB is also adding a lot of features (Venture Board and Job Board) that other sites like Tech Crunch launch as separate destinations. Frankly, given VB’s smaller traffic and niche nature relative to Tech Crunch’s massive audience and reach, the different strategies are actually each correct for each site.
- Tale of the tape:
According to Federated Media, Venture Beat generates 470,000 pageviews per month.
- Long term business opportunities:
Naturally, VB can plan a few conferences and charge a bundle.
A decision the company will have to make is to launch subscription-based services to generate more revenue and diversify or it can seize the opportunity to shrink many of the markets in which VB’s traditional competitors compete in, it can do so by taking advantage of its lower cost base to offer for free what competitors need to charge for.
In fact, it can even undercut its online competitors / complimentary services such as TheFunded.com or Dealipedia by leveraging its audience. Over time, I can actually see VB raising money and acquiring some of these services.
- Revenue potential:
The revenue will be recurring and stable because professional services will line up to advertise, but it won’t be exponential. Like everyone else, there will be considerable conference opportunities for VB, that is for sure. Eventually, I see VB favoring subscription services because its readership will consist of many businesses who don’t mind forking over recurring fees for accurate information on the market.
- The traditional publisher it reminds me most is…:
Crain or Thomson Financial, actually, units thereof.
- Exits:
It won’t be long before VB is acquired. After all, the instant outside money came in, an exit is required. That exit won’t be an IPO, but we see an acquisition by someone interested in the professional services market. We even see News Corp. potentially making a run to compliment WSJ as it looks for more financial real estate (especially since it now plans to wisely keep WSJ behind a paid wall).
Acquisition by Thomson, Crain, Pearson, TheStreet.com, CNBC or News Corp. for either WSJ or FOX Business.
5 - Mashable
In the summer of 2005, Pete Cashmore bet on black, and he struck gold.
A few months before launching Mashable as a blog covering social networking, News Corp. acquired MySpace’s parent for $580M. That deal created Fox Interactive Media, but more importantly, it ushered an era of unprecedented investment in so-called social networking concepts and companies. While Michael Arrington was covering it all from Silicon Valley, Pete Cashmore was returning the favor from London.
Over the next three years, both sites have grown to become synonymous with Web 2.0 and social networking respectively.
- From being a one-man shop to an actual company:
Admittedly, nowadays you have to look hard to find a new post penned by Pete Cashmore; indeed, much of the posts come from contributors Mark Hopkins, Kristen Nicole, Adam Ostrow, Tamar Weinberg and company, but this has allowed Cashmore to build a comprehensive company around Mashable.com.
- From property to networks:
Admittedly, Cashmore is a new media maven who has proven his chops by maniacally focusing on one site, Mashable, while many of his counterparts have taken a multi-site approach to brand and company building.
By leveraging the popularity of the site and goodwill he has generated, Cashmore complements Mashable.com with consulting services as well as bells and whistles services that turn the site covering social networking into a social network of its own.
- Focus: mass vs. niche:
Admittedly, Mashable is a big play on social networking. While a lot of companies, products and services focusing on social networking have come and gone, Mashable remains the shovel and helmet supplier equivalent of the space. While 99% of social networking sites will bomb, all 100% of services in the space (including the 1% that succeed) have to go through Mashable. For that reason, Cashmore’s razor sharp focus on social networking is actually genius.
- Tale of the tape:
Federated Media’s site gives Mashable 5,170,000 pageviews. Clearly Mashable is a large blog and bills itself as the largest one covering social networking.
- Long term business opportunities:
Cashmore already seems to have diversified away from a pure-publishing and advertising model to one that includes consulting and what not. I am frankly not sure how meaningful those businesses are, but the mere suggestion that they are additional product lines is important as it gives Mashable a greater sense of value.
Despite its sole focus on social networking, the fact is that social networking itself is not a fad, media has gone social so Mashable has a chance to galvanize the coverage thereof. In light of Tech Crunch’s increasing reach and scope, Mashable has the opportunity to become the leading brand in the specific space, in fact.
- Revenue potential:
Given Mashable’s audience and size, it can generate decent revenues from advertising alone but clearly, if Cashmore can build up a real consulting business around the brand, the advertising business can look pretty small next to the services business… especially if he finds as many consultants to match his roster of writers.
- The traditional publisher it reminds me most is…:
Any publication that is issued by a professional services organization.
- Exits:
Depending on how meaningful Cashmore can make the consulting business, Mashable has various growth opportunities, and as such, numerous exit routes, too.
4- GigaOm
- About the Founder:
I’ve personally met Giga Om founder Om Malik a few times and certainly consider him a friend and mentor. The man knows publishing, technology, new media… and common sense. With that being said, Malik came to NYC in 1993 to write for venerable Forbes. He’s also written for Red Herring, Business 2.0 along with occasional writings for the Wall Street Journal and Crain’s NY Business. Incidentally, not many people know this: but he was, briefly, a venture capitalist.
I think this gives Malik an interesting appeal as a writer, because he surely does not regurgitate press releases and spew the company pitch. Malik will tell you what’s on his mind. He’ll tell you if something seems off or fishy.
- From being a one-man shop to an actual company:Malik has managed to use his network of writers - and True Ventures’ funding - to lure many talented writers. Liz Gannes and Chris Albrecht are very good writers, but I am biased because I read some of Malik’s blogs more than others. He has an impressive roster of full-time and part-time writers that certainly give Malik a lot of points in this category.
In fact, in December 2007, Malik suffered a heart attack, he has recovered but the fact that his company did not miss a beat speaks volumes about the team he has put in place. In addition to the staff of writers, it should be noted, GigaOmMedia’s operational bench is also second to none.
- From property to network:
Malik’s blogging empire includes
- GigaOm: broadband and telco news,
- WebWorkerDaily: productivity at the office
- NewTeeVee: online video
- Earth2Tech: admittedly a play on the burgeoning Green herd mentality (hey, he was a VC at one time)
- FoundRead: a sort of editorially curated bookmarking site, I presume.
- Focus: mass vs. niche
Clearly the sites in Giga Om Media’s network have a penchant for broadband, which is what Malik’s background lies in. I do not see Malik ever branching out to lifestyle, for example, and I’m not sure anyone wants them to, either.
- Tale of the tape:
According to Federated Media, GigaOm (the site) generates 1,250,000 pageviews/month, round it up to 1.5M-2M for the entire network.
- Long term business opportunities:
Clearly an actual publishing business already, I see Malik emulating Rafat Ali and adding country-specific sites as well to go deeper into the sectors they cover.
- Revenue potential:
Limited to technology and consumer electronics, but by virtue of these being big enough categories and his readership being extremely valuable, GigaOmMedia will do fine. The CPM he can charge are probably considerable. As a wise man once said, The Economist does not need to publish a 200-page magazine to generate boatloads of money. Neither does GigaOm.
- The traditional publisher it reminds me most of is…:
Fast Company, Industry Standard, Ziff Davis
- Exit:
Despite all of the talk that one day CNET might buy Tech Crunch, I see some considerable personality conflicts before the lawyers are even called in. However, I certainly see CNET making a run at Giga Om. I could be wrong because CNET has a lot of writers and GigaOm has a lot of writers…
3- Tech Crunch
- About the Founder:
Michael Arrington launched Tech Crunch in 2005 to cover Web 2.0 startups. A former corporate attorney, Arrington has an interesting career that spans law firms and jobs in business development/counsel roles in the domain name industry in the US and Canada.
According to Google, over 14,000 other sites link to TechCrunch, and Technorati says TechCrunch is the 16th most influential blog in the world. Named ‘Best of the Web 2006′ by BusinessWeek.
- From being a one-man shop to an actual company:
Tech Crunch is synonymous with Michael Arrington, no doubt. Of all of the networks, Tech Crunch faces the biggest risk of not being able to go from a one-man show to a cohesive unit because TC’s coverage was never objective nor abstract, it was always subjective and personal, coming straight from the gut.
As such, striking the same balance with new writers will always remain a challenge.
To his credit, Arrington has surrounded himself with a cornucopia of talented writers over the years, including Marshall Kirkpatrick in the early going. Today he employs blogging pioneer Duncan Riley and has even managed to lure Erick Schonfeld to the cause; Schonfeld is a gifted and experienced writer who has become his Co-Editor. Yes, I know, that title will have to change over time if Schonfeld is to remain part of the team in the long-run. I think Arrington realizes that, but also recognized that he could not set Schonfeld up for failure by bringing him on and appointing him Editor from the get-go.
- From property to network:
Tech Crunch remains the 800-pound gorilla in the industry, let alone within Arrington’s empire… but he has nonetheless churned out TC UK (who itself has had an interesting history, especially in the backdrop of the TechNation debacle), along with CrunchGear and MobileCrunch. Personally, I’ve visited the other sites all of 5 times, but that’s my shortcoming and not a result of the writers. In fact, it makes total sense for Arrington to have carved out those two sites.
I must say that his CrunchBase database listing companies’ has potential to be something interesting, though given the state of flux of most of the “companies” TC reviews, I find that it might turn out to be a perennial distraction too. Certainly give his team props for trying to do something out of the box. All in all, I like it and hope it survives and develops; it sure beats its inital incarnation (TC readers will know what I am referring to).
- Focus: mass vs. niche
Tech Crunch is actually somewhat focused but it has no doubt gone from covering startups to covering startups and established companies, no doubt. Tech Crunch’s massive success dwarfs the other sites: there’s a UK version, along with spinoffs in mobile and consumer electronics, there’s also Crunch Notes which gives a glimpse into the sojourn of launching a publication online and the challenges of startup life… In all fairness, Crunch Notes occasionally provide good fodder but is usually a big echo chamber with details I am unaware of, but that, once again, is not a knock, just an observation.
While many have pointed out that TC does not represent consumer trends and is in fact very niche, the simple fact is that it’s grown to be the largest “niche” site, with over 500,000 RSS subscribers.
- Tale of the tape:
Tech Crunch is the king of pageviews amongst this peer group, with 5,510,000 pageviews per month, according once again to Battelle’s Federated Media.
- Long term business opportunities:
Some days, I think TC founder Michael Arrington will burn out, others I think he is on his way to becoming a cross between Bob Guccione Jr. meets Roger Penske. Puh-lease let me explain.
He reminds me of Guccione Jr. simply due to the Axl Rose affair where he was willing to step into the ring and actually fight Rose after the Guns ‘n’ Roses front man called him out in Use Your Illusion’s Get in the Ring. Bear in mind, while Rose had the tough guy persona, Guccione Jr. had been taking karate for a decade. That’s right, Rose backed down. In some ways, Arrington does not back down from anyone, regardless of the merit of the debate and independent of whether he’s right or not.
Why Penske? Penske was a great driver who risked his life every week at races. Eventually, someone made him realized that his time - and life - was better spent making deals and what not. So Penske gave up the driver’s seat for the business duties. I am not sure if Arrington is Penske or the anti-Penske because as a lawyer and entrepreneur, Arrington’s track record is not as impressive as his track record as a writer and publisher is, so maybe, he should hang the legal briefs and business plan and simply write his heart out. Legend has it that he would blog away at his desk until he literally passed out.
That’s something I went through when I wrote my second book (on Alexander the Great) in 6 days in 2004, the difference was, I did that for 6 days and realized I did not want to do it 24/7/365… Arrington seems to have done it for two years so he deserves a lot of credit for his stamina, persistence and determination.
All to say, Arrington’s legacy remains to be seen: time will tell if he is Priceline or Pets.com, but like both Penske and Guccione Jr. the man is a fighter and takes no crap. Agree or disagree with him, I like that about him and despite the warts estimate that he will be around in one form or another for years and decades to come.
- Revenue potential:
One word: considerable.
Tech Crunch not only has a solid readership in terms of quality of its audience, but it has racked up considerable media mentions, something that sways media buyers looking to spend ad dollars. Lastly, Tech Crunch’s relative high audience ensures that it can actually earn ad dollars, too. Admittedly, 5M pageviews is tiny by maistream publishing standards, but for a blog that was largely a one-man operation for its first year of operations, it’s pretty impressive.
Tech Crunch has already branched off into events and conferences.
- The traditional publisher it reminds me most is…:
Industry Standard meets Red Herring with a dash of Penthouse (if we are to continue the Guccione example, after all).
- Exit Strategy:
Well, Henry Blodget has already pointed out the inevitable CNET possibility. I’d also throw in News Corp. for no reason other than Tech Crunch’s CEO Heather Harde was a dealmaking maven at Fox Interactive Media…
2- Content Next (Paid Content)
- About the Founder:
Rafat Ali launched Paid Content over five years ago so that he could showcase his writing skills in the hope of getting a job. At a time when companies were laying off writers and new media was the butt of the joke, Ali hustled and beat everyone to the story. Today, he sits arguably at the top of the echelon in the industry’s leading publication covering media.
- From being a one-man shop to an actual company:
Gradually, and we mean gradually, Ali has hired a wide array of writers. Today he is backed by Staci Kramer as Co-Editor (Ali remains Publisher and Co-Editor). CNM employs numerous writers that include David Kaplan, Joseph Weisenthal and company.
- From property to network:
After launching a site devoted to wireless news, MocoNews.net, Ali proceeded to scale his network by going against the grain: instead of slicing up the topics by segment, Ali seems to be focusing more on geography now, with sites in the UK and India, dubbed ContentSutra.com. Both sites have strong writers under the leadership of Robert Andrews and Nikhil Pahwa respectively.
- Focus: mass vs. niche:
Context Next Media’s focus remains media, and with the line between old and new media becoming blurrier and blurrier, we think that the B2B and B2C topics up for grabs for Ali across the numerous geographies should represent considerable upside over time. When the dust settles, Ali will have built a mainstream brand.
- Tale of the tape:
One of the few sites not repped by Federated Media, I suspect CNM does about 4M pageviews per month, though the company’s mailing list is the real gem and crown jewel. The number of media executives, bankers, investors and entrepreneurs who start their day with Paid Content remains very high, even since Gabe Rivera launched his genius TechMeme product.
- Long term business opportunities:
Considerable.
Ali has built the top brand in the space, the WSJ or Fortune of online media. The hustle, determination and can-do attitude at a time (when he launched) when few took him seriously (by virtue of the industry’s mood) are sources of motivation for any entrepreneur, writer and aspiring publisher. What Ali has been able to do, out of LA (so much of what he covers is NY-centric, which is three hours ahead of LA!) is simply amazing. Today, of course, Content Next Media is fairly global.
The company has also brought in an impressive operational team and is backed by the dean of venture capital, Alan Patricof, whose Greycroft Partners invested in CNM in 2006.
- Revenue potential:
You don’t need to be an advertising guru to realize that Paid Content is printing money. The site boasts about sponsorship packages which shun CPM-pricing models, signaling that business is booming at CNM. The company’s conferences and mixers are adding velocity to the company’s top line, and with a lean structure (the company only last year got an actual office), we’re sure that the bottom line is healthy, too. Lastly, the site has in the past tinkered with reports and studies, but seeing Ali give some of these away suggests that the company is - like most publishers - looking for more ad-supported inventory and not seeing the kinds of return in subscriptions as it is in advertising.
- The traditional publisher it reminds me most is…:
Variety and Fortune meets Playboy. Let me explain.
Variety is quite simple: what Variety is/was to entertainment news, Paid Content is to media news, which is always related to entertainment.
Why Playboy? Well, Hugh Hefner worked at Esquire, asked for a $5 raise and didn’t get it. When Esquire moved from Chicago to NYC Hef stayed behind and launched Playboy. Today, the rest is history. In the same vein, Rafat could not land a job five years ago yet today he is the first to report on job changes, industry news and mergers and acquisitions that change the landscape.
Why Fortune? Well, Fortune is the Cadillac of publications in the space, and online, Paid Content remains the gold standard.
We’re not saying that Paid Content will never be dethroned, in fact, it’s close on any given day. But much the same way that people like Henry Luce revolutionized the print industry, Rafat Ali deserves just as much credit for changing the online space… so there’s a hint of Fortune, too. I’d also toss in Dow Jones, for a few reasons: seeing Ali hold court at the Waldorf=Astoria, interviewing Gordon Crovitz (the publisher of The Wall Street Journal) at the recent Future of Business Media conference, I could not help but think of the common lineage between Dow Jones - once a humble newsletter - and Paid Content, whose newsletter wakes up hundreds of thousands of readers every day from Mumbai to Madison Avenue.
- Exits:
WSJ, Time Warner, CBS (Marketwatch founder Larry Cramer sits on his board, he was formerly President of CBS Digital before Quincy Smith came on board. Read our “meritless post” on this last rumor here).
1- Valleywag, part of Gawker Media
- About the Founder:
Frankly, it’s hard to talk solely about Valleywag and not put it in the context of the Gawker Media network, since that’s the point of the post. As such, it’s worth noting that as a blog network, Gawker Media is the GE, MSFT, Google, Facebook, etc., of its space.
Founder Nick Denton was always a step ahead: an Oxford educated former journalist for The Financial Times, Denton did the whole business networking thing before it became common place (First Tuesday), content syndication (Moreover) and then blogs before Movable Type conjured anything other than Johannes Gutenberg’s printing press.
Denton’s net worth has been estimated at over $250M, fueled by the sale of First Tuesday and Moreover, as well as his holdings in Gawker Media, which he funded with his own personal money.
- From being a one-man shop to an actual company:
While Gawker Media is synonymous with Nick Denton to those in the industry, to its readers, I doubt that it is, and this is key. Since its inception, Gawker Media has lured and developed more writers than most established publications.
- From property to network:
If we’re going to ask how well Gawker has gone from a property to a network, we need to start not with Valleywag, but with Gawker, the flagship property. As of January 2008, Gawker’s sister sites include 15 different weblogs, including Defamer, Fleshbot, Deadspin, Wonkette, Lifehacker, Gizmodo, Consumerist and Kotaku… oh, and Valleywag.
- Focus: mass vs. niche:
We might be repeating ourselves, but Denton has cornered the market. No other blog network can match the brand equity Denton’s blogs command, offer the audiences he can offer across as many verticals that Gawker can. Especially once Time Warner bought Weblogs Inc. for $25M, Denton’s Gawker Media became one, if not the most valuable and sought after privately held publishing company in the world, which just happened to be powered on blogging software.
- Tale of the tape:
Denton is notorious for publicly announcing the traffic on his sites. Gawker Media’s traffic is heads and shoulders above all other blog networks.
- Long term business opportunities:
Gawker can - if it has not already - enter merchandising, movies, and even, dare we say it, print (though we doubt it will).
It can also have a sizable and interesting mobile business. Of course, to do that, it needs a better grasp of video opportunities, which all of these companies generally fare poorly in.
- Revenue potential:
The estimates are all over the place, but in my opinion, the company currently does $20M in annual revenues (or just under $2M per month on average, I suspect its strongest month is November when it does about $3-4M in revenue). That figure is very feasible given its traffic, brand equity across all sites, demographics and the proximity to Madison Avenue…
It is conceivable for Gawker Media to become a $100M in annual revenue company within 10 years, if not sooner. With 20 blogs, that’s only $5M each per year, a rather attainable figure. Flesh out the more seedy sites like Fleshbot and adjust accordingly upwards for premium categories like Gizmodo and you will see that it’s not very hard to command a revenue figure that impressive.
- The traditional publisher it reminds me most is…:
Hearst or Conde Nast.
- Exits:
While founder Nick Denton says otherwise, this is a no-brainer: News Corp., Time Warner, Hearst or Conde Nast. Though Time Warner did buy competitor Weblogs Inc., and is looking at unloading all non-network AOL properties and content sites.
Ultimately, however, I see Denton refusing to sell and becoming the Hearst or Conde Nast himself. Mind you, the revenues might not come close, but in terms of mindshare and relevance - particularly online - he’s almost surpassed them.
CONCLUSION
We hope you enjoyed this list of tech-focused blog networks. All right, now like any self-respecting blogger, bash away.
Upcoming posts to come include:
- Top VC blogs (ex: AVC, Paul Kedrosky, etc.)
- Stand-alone blogs to watch out for in 2008 (ex: TechDirt, Alarm:Clock, Center Networks, Daily Tech, Laughing Squid, Gaping Void, Lost Remote, etc.)
- Big company blogs (ex: Boomtown, Tech Trader Daily, Business Week, CNET, Betc.)
- Entrepreneur blogs (ex: Jason Calacanis, John Battelle’s Searchblog, Max Levchin, etc).
Suggestions are welcome for all as we formulate those lists.
Editor’s notes:1 - Weblogs Inc., whom Time Warner acquired was excluded from the list by virtue of not being a privately held company, but surely deserves consideration on this list but will probably pop up in Big Company Blogs.
2 - Moreover, I suppose it is worth mentioning that HipMojo.com and the Blogger Mojo network are directly / indirectly competitive to some / many of the sites mentioned above.
Om Malik sent me a link to his post on “NewCo thinks it’s worth $1B.”
Is it? Well, it’s not what I think that matters, it’s what the market thinks, be it private or public.
COMPARABLE #1: M&A - Google acquires YouTube for $1.65B
We already know that Google, a publicly traded company then worth $140B, spent $1.65B for YouTube in October 2006. YouTube has doubled in traffic and today accounts for over 50% of the video market, and alone accounts for 10% of Web traffic. Yeah, scary I know.
The point is, even though YouTube’s doubled, we know that its $1.65B sale created one comparable.
COMPARABLE #2: Financing Round - Joost Raises $45M
Earlier this year, Joost raised $45M from a number of strategic investors. That’s a lot of money for a startup, but mind you, Joost’s founders had not one but two successful viral companies in Kazaa and Skype, the latter having sold for ultimately $4B to eBay. In other words, they had the street cred to win over Wall Street, Silicon Valley even though the jury is still out on main street. Disclaimer: our company’s web video unit is a content producer and partner of Joost. Some time ago, Paid Content, too ran a story about NewCo’s attempts to sell 10% of the company for $100M for $1B. We commented on it here and said that while it was crazy, it was a crazy market once again and it was not important what we thought, for what counts is - in the context of the greater fool theory - what someone, anyone thinks. Bottom line: while we were speculating with a capital S, we said the $45M valuation probably implied a valuation of $180M-$225M. I wonder how many investment banks - devoid of actual figures - would have the cojones to issue a range like that, publicly.
But that’s not the point now, is it? I admit I could be wrong, but the rationale to the Joost round is here, once again, feel free to chime in.
Like it or not Mr. Malik, that’s comparable #2.
COMPARABLE #3: Relative Value
A third comparable, like it or not, is News Corp.’s $580M (which is now being reported as a $630M deal, by the way) acquisition for Intermix, parent of MySpace. Sure, MySpace is not a pure-play video site, but it’s a social networking hub and YouTube too is a social networking company, and today MySpace further moved onto YouTube’s terrain so like it or not, MySpace and YouTube are largely comparables.
Subsequent to the Intermix acquisition, News Corp. sold back all of the non-MySpace assets back to Demand Media, whose Chairman and CEO Richard Rosenblatt was the Chairman of Intermix Media, and brought in to replace Brad Greenspan, founder of Intermix (formerly eUniverse). It should be noted that Greenspan sued/is suing/will sue everyone involved in that deal because he feels that MySpace was worth far more than $580M.
Whatever the merits of that, shortly after the acquisition - which we dubbed as the #1 Web M&A deal of all time on the strength of Google’s $900M ad deal for News Corp.’s Fox Interactive Media. Oh yes, the Google $900M deal. While the deal called for Google to power search and display text ads on FIM properties, the fact is that Google wanted MySpace and News Corp. threw in the rest for good measures. In all fairness I said, when the $900M Google deal was announced, that from a pure mathematical perspective, it was not worth it.
But due to all of this, Jordan Rohan of RBC Securities came out and said that by 2010, MySpace could be worth some $15B. It was link baiting, sure, but it was not all that crazy when you think that Yahoo! is now smaller than MySpace when measured by pageviews. Yes, pageviews are not as important as they once were, but there plenty important. Of course, Yahoo! generated $6B of sales in 2006 whereas in 2007 all of FIM (including MySpace) will clock in $500M. That last figure is suspect, because Google alone is slated to pay $25M per month, or $300M per year to FIM. But, who’s keeping track, it’s all freaking Monopoly money and Rupert Murdoch is sitting pretty on the Park Avenue.
Seeking to move onto the Boardwalk, Rupert Murdoch now came out and - via his London Times, mind you - suggested that he spin MySpace into Yahoo! in exchange for a 25% stake. If you do the math, which everyone did, that implied a $12B valuation for MySpace in light of Yahoo!’s $35-40B valuation.
This was bold, for partnerships usually would call for Murdoch giving up shares in News Corp. for an ownership in Yahoo!, and not Murdoch giving up MySpace to Yahoo! in exchange for an ownership in Yahoo! But the man is bold and ballsy, and more power to him. We broke this down here.
This was bold, also, because while just last year Murdoch pegged MySpace to be worth $6B, this now represented a 100% spike from that already-crazy valuation. Mind you at the time, UBS came out and pegged all of FIM at $2B, prompting me to suggest that FIM was worth more separate than combined. This was in line with my recommendation that FIM should spin off IGN, the forgotten child in the landscape.
If you draw the various points in a spectrum:
- the $580M sale,
- the $2B UBS tag on all of FIM,
- the $6B Murdoch valued MySpace last year
- the $12B Murdoch suggested MySpace is worth last week
Oh, and account for the fact that Google paid $900M for a non-equity-holding right to sell ads, only, then clearly, whether we like it or not, in the murky valuation game, MySpace is now clearly worth somewhere between $1B and $5B. Why not more… especially when #2 social network Facebook is growing fast and its main venture capitalist backer Peter Thiel implied a $6B valuation for Facebook last year, before the euphoria that begun from the bandwagon jumpers.
Hold on, just got a request to add a friend on Facebook…
Ok, I’m back.
The point is, anyway you dice it, MySpace does provide a great comparable as well.
COMPARABLE #4: News Corp. and NBCU
I sometimes wonder why we offer all of this free advice, valuation etc., but we do, and it’s all good. We’d pay you banking fees for still reading. But:
- News Corp. is worth $70B, with some $20B in sales, assets etc.
- NBC is worth, well, as part of GE, it’s worth a lot. I wish there was some way we could determine what it’s worth. Oh, wait. We can. Just a month ago I wrote “What would NBCU be worth if spun out of GE?”
Using a bunch of figures from GE’s 2006 annual statement and current price/sales and price/earnings multiple, I pegged a valuation of $32B for NBCU. That’s a value amount, and not a price it could fetch if auctioned off.
So the point is, NBCU and NWS have partnered up and own this new company, called NewCo.
What’s its value?
COMPARABLES TABLE SUMMARY
As you run down the numbers, you see that the valuations for startups in the video space, established social networking plays, video assets within publicly traded companies and a new high growth asset within two of the largest media companies can surely be worth $1B.
Would I, if I had a blank check, buy $100M for 10% of NewCo.?
Well, that’s not the same question as “is NewCo. worth $1B.” A certain well-known web entrepreneur recently allegedly raised $16M for a search startup on a valuation of $100M. Would anyone have paid $100M for that asset now? Well, no, especially when you realize that very few companies in search past the top handful fetch that kind of valuation.
But when we see that marketers are shifting ad dollars online, and online video is about to explode etc., I can see why News Corp. and NBCU would want to dilute if and only if they can get a lofty valuation.
I should disclose that we’re part of NBC’s NBBC roster of publishers and personally I fully anticipate to be part of the content and distribution partners when NewCo. launches (for Mr. Murdoch apparently can separate personal beefs of his lieutenants with his business interests, right?, and if we’re not included, you know it’s only because he cannot separate his personal opinions, or rather, a handful of his bad apple lieutenants’ opinions. Dow Jones, you might want to note that storyline, by the way). But, we don’t let that sway us in this assessment, we’re just being 100% transparent.
While we’re also on the issue of disclaimer: I’ve also joked to one of my contacts at NBC (well, half-joked at the time anyway) that NBC should consider investing in our company so that I can run this puppy if they plan on hatching it one day. Before anyone gets excited, please note I was saying that in jest because if you knew the entire story between my former employer News Corp. and I, you knew the chances are that are slim to none, for NBC is partners with News Corp. in NewCo.
But therein lies the problem: the valuation is half the problem; the exit scenarios are the larger problem.
NewCo. is so-called old media’s attempt to check YouTube into the boards, which is understandable. But the thing is, YouTube’s value was largely as an acquisition, and not for its capital gain, whereas NewCo. holds tremendous, insane income gain opportunity but fairly little capital gain opportunity, and we know VCs like capital gains after all. Who would one day buy NewCo? News Corp.? NBC? Google? The People’s Republic of China?
I think when everything is said and done, there is way too much money amongst VCs and private equity firms for NewCo. not to be able to fetch such a valuation. And if they don’t get it, then they can bide their time and get the deal they’re seeking.
That’s the beauty of the Web: web companies are generally not in a rush to sell equity. We’re in the driver’s seat, technically. Someone might want to remind NewCo. of that. Then again, maybe NewCo. is not a new media company, and an old media one after all, at which point, there’s a problem, especially when YouTube’s grip on video is over 50% and Google’s grip on search is over 50%.
My humble recommendation to NewCo. - ironically something that I applied to little WatchMojo.com - is:
- build up your content,
- establish your distribution (done at 96% of US homes),
- work out the technology kinks and
- let the money come to you. First it will be income, then it will be equity.
At that point, you can not only get the right valuation but the right terms too.
What do you think?
I think TechMeme is great, but something tells me that Alexa wildly over-estimates its actual traffic. If you think about it, tech bloggers are heavy Alexa-weighters and they skew most tech blogs. Seeing how so many rely and link to TechMeme.com you can imagine that TechMeme gets a favorable bounce. It’s all good, it’s definitely deserved: the site is efficient and a great source of great new content. I do sometimes wish that it penalize some of the me-too blogs that simply rehash what others post, but hey, that’s where your brain should kick in and determine where to pay more attention to.
But I also think - like most people - that the intricate and intuitive way that it indexes and organizes news is very interesting, and it has the potential to really dominate across many categories, not just tech.
Some people have said “TechMeme is what Google News should be,” and while I might sound drunk when I say this, TechMeme’s modus operandi on some days reminds me of Google back in 2000, when you sort of knew it had a lot of potential.
Its founder Gabe Rivera has applied the TechMeme mojo to Entertainment (well, smut anyway), politics and baseball, and he explained to me a couple of months ago why he did not open it up to more categories. For a second I thought Gabe wasn’t a business guy but his rationale proved to me how savvy he actually was, for we apply the domain specific vertical search engine methodology at MetaMojo.com to a myriad of categories even though only a handful yield really good results: health, music, film, video games, travel and a couple more…
Focus Ash, focus Ash… Anyway, when I see that the once-upon-a-time much ballyhooed Topix.net just/finally cracked the Top 20 news sites according to Hitwise, I wonder why TechMeme does not get more aggressive and really kick ass in all-things-news.
Frankly, the site should remain independent. My theory is that Topix.net slowed down once the major newspapers invested in the company. Alternatively, while the hard working guys at Topix.net deserved a pause, maybe they paced themselves a bit too much once they partially cashed out. Who knows. That last comment wasn’t a knock, it’s simply to say maybe it’s not all the newspapers fault.
Whatever the case, the argument could be made that TechMeme should remain independent to avoid it from becoming skewed in its “coverage” but also so it could execute anywhere it wants to.
In the past, I’ve encouraged TechMeme.com to launch a similar product for comments, this would effectively suck out a lot of traffic from the usual suspects such as TechCrunch, PaidContent, Valleywag, GigaOm and company and get the “conversation” going on his site. It’s a pretty ballsy move, but let’s face it, if Rivera really wanted to do, he could turn the tables around and become the next Michael Arrington… just that he does not need to work 18 hour days (or who knows, maybe he does).
Today, I realized another thing that Gabe should do (welcome to “open source management” - I guess, to be filed under “advice you didn’t ask for / assuming you care”) is to develop a TechMeme Grid that would allow readers to:
- list all of the posts that have been indexed from a given source (say you like what this blog has to say on topic X, you can then jump around and read other things I’ve written, and then from there jump onto other blogs, if you wish).
- list all of the posts that have been indexed under tags, be it company, or topics.
If Gabe did that, overnight his sites would grow by leaps and bounds. I know what you’re thinking, Topix does some of that, and Technorati does some of the rest, but TechMeme does the tracking of “conversations” much better, so it could move into the other areas quite well and really suck a lot of traffic, and send out more.
These are just peripheral things he could do to really turn it up a couple of notches. As I see things, while there are plenty of other social news services - be it aggregators, “memetrackers” or bookmarking tools - I repeat once again that social news is really just getting started. I guess by way of disclosure I should also say that we have a social news/bookmarking tool ready to go, and we have search technology on hand. At some point we might launch into the space, but if you have not noticed we’re busy trying to kick ass in online video content, and a few other fields.
But I really hope that Gabe and TechMeme remain independent and don’t succumb to the tempting offers to cash out, because the more I think about news, the more I think of search in 2000… will TechMeme (or Topix) become the king of the mountain? Who knows… the company has many challenges and obstacles in scaling. And frankly, money alone or more resources won’t do, it needs some kind of raison d’etre beyond the tech crowd, basically.
But right now, to find the answer to most news related queries, it remains a crapshoot, and indeed that’s quite reminiscent of search back in 2000… in other words, that spells a massive opportunity for both Topix, TechMeme, Technorati and all things in between… which come to think of it makes it very, very odd that Greylock just plunked $8M into Kevin Rose and Jay Adelson’s Revision 3, when they should be honing in on Digg.
Daylife raises $8.3M in round 2. There was a round 1? Wasn’t social news over? And does that mean investors are twice as dumb? Not quite.
Yet another news service is getting funded though, does this suggest that indeed news on the Web is still a wide open game?
In all fairness/to clarify, I have not spent much time looking at Daylife, there are simply too many to go through these days. Not a day goes by where a new social bookmarking icon doesn’t pop up below an article, in fact.
But if news is still wide open, this begs the question: what would constitute the perfect news product of the 21st century?
I think I can sum it up with three things: Topix + TechMeme + Digg. But, there’s something missing, or rather, all of those things have something to be desired. Oddly, none of those are search engines!
Maybe fittingly so, because search engine will forever be slightly or very late to index new sources… maybe that’s why Digg, TechMeme and Topix work well in their own right.
- Admittedly, Topix was great until newspapers invested in it… after that it’s almost useless… but the premise / theory is great. You almost think that it’s become the poster boy for “don’t accept money from old, old media.”
- TechMeme is useful and in many ways never ceases to amaze me, but then on some occasions I find it makes some of the best minds braindead because it becomes a downward spiral. People don’t want to start writing original things because they just want to continue the “discussion.” By the way, that term (discussion) should also be in the most obnoxious terms.
As a side note, one thing that is great about TechMeme is that it encourages editors to go back to old stories and add links to new ones, keeping old articles fresh in that regard. Only TechMeme encourages you to that as a publisher, and for that it deserves some credit. Admittedly, few editors will admit they do that, because on the surface it seems like you’re chasing links back, but it does add context and relevancy to older posts so it’s worth doing it, even if TechMeme won’t index you all the time. I’m curious if Gabe realized that or sought to do that. Better yet, I’ll ask him.
- Digg is a waste of time in many ways, but it’s a fascinating concept. If it wasn’t hijacked by a dozen 12 year olds, it would do wonders.
All to say, if I had, say $1M to venture into a social news arena, I’d do something along those lines.
For the record, we have a social bookmarking/news tool ready to go, but we’re so busy with WatchMojo.com, the blogs, the search, and of course StreetMojo.com that I have not yet even dove into social news, and probably won’t… but as I see it, news and the entire information challenge is still wide open.
What do you think is missing from that recipe?
I had the opportunity to meet and chat with TechMeme founder/creator Gabe Rivera in LA last month.
Check out this interview with him on Wired.com. As someone who’s studied, written about and interviewed hundreds of very successful blokes from media, business, sports, entertainment etc., I was really impressed with Rivera.
He should/could be walking around with a massive chip on his shoulder. I referred to him as Rafat Ali 2.0 in an earlier post, a major compliment to both Ali and Rivera; Valleywag last week called him Craig Newmark 2.0, another major compliment.
Point is, he seems very down to earth and a genuine nice guy who saw a need and met it. More importantly, despite the tremendous clout he has on unearthing great new sites (at least indirectly), he is remarkably humble and modest. The fact that he’s based in Silicon Valley where modesty and humility are rare traits, then it’s even more remarkable.
I am not sure how large TechMeme’s actual audience is, but it’s definitely very influential, so you’d be surprised at how many non-hardcore IT/web/search/industry folks don’t know it, so spread the word… and every time I meet a baseball fan, I tell them to check out Ballbug, ditto Wesmirch and Memeorandum for entertainment and political news. I fully expect Memeorandum to blow up as we get closer to Election 2008, with articles in Time, etc. to follow.
Previous posts on TechMeme.com on HipMojo.com:
:: TechMeme’s Killer Move: Allow comments
:: Digg vs. TechMeme Exit Opportunities and Growth Strategies
Techmeme is a great site, Gabe Rivera is in many ways Rafat Ali 2.0. That, of course, is a huge compliment to both Rafat and Gabe. Rafat’s influence has been galvanized and being a trade publication, he is not going anywhere (harder to lose relevance, in my humble opinion, than a consumer brand that needs to appeal to fickle and ever-changing tastes). I wrote about the impressive roster of speakers that he and his team at Paid Content, Content Next Media have assembled here.
I do not think that a site like TechMeme competes directly with Paid Content, in fact they are highly complementary. Some time ago, I did write a post looking at how Digg and Techmeme could scale, expand and ultimately, exit.
But, while Rafat has had to raise outside financing, assemble a board and do a lot of great things to continue to scale his company, Gabe Rivera’s Techmeme has provided a more automated way to index the web, ranging initially from blogs to mainstream sources. At some point, you can index more sources, but you are splitting the pie in more pieces. And, since TechMeme is largely read by folks in the industry, like Paid Content, while its influence can soar, its readership might not. That does not mean it’s lights out or anything, it just means that you need to find growth elsewhere. Gabe has not seemingly raised outside financing, so he might not be in a rush or under pressure to grow.
The problem, naturally with a site like TechMeme - unlike Paid content - is that it must have a very low pageview to unique ratio. We can say what we want about pageviews, they won’t go away because it’s an easy to understand and use metric for media buyers, which I have addressed in depth here… but what I think Gabe could do that would considerably add time each user spends on his site and dramatically boost pageviews is to allow for comments on his site. Take the discussion away from the blogs to his site. Audacious, to some extent, but probably very effective. Of course, commentors on Valleywag are different than commentors on Tech Crunch etc. But more importantly, in the wake of pageviews being overshadowed by average time spent by user, is interesting.
And yes, there’s comment spam, but you have tools like Akismet.
And, while I agree that comments are usually pertinent to each underlying source’s position, who are we kidding, 50% of the usual links emanating from a leader story simply reference and link back, in other words, there’s little additional coverage or research. Before you blast me, note, I said 50%. So if you go beyond the surface, great, keep up the work.
But if Gabe allowed for comments, the (oh-oh, here’s the word) stickiness would shoot up. Of course, advertisers do not really like to advertise on message boards and comments pages, but boosting a site’s metrics by having community features like boards and comments pages is the oldest new media publisher trick in the world.
Any thoughts Gabe? Others?
As we continue to grow at WatchMojo.com, I am always looking for more and more ways to scale the production, distribution, syndication and monetization of our content. It’s not obvious, but it’s a nice little challenge.
Of course, these days, the promise and premise of aggregation is one that all publishers are looking at. Bear Stearns analyst Spencer Wang presented something interesting on the opportunities of aggregation and contextual content. We embrace the context is king mantra quite a bit ourselves.
Content Aggregation
And when it comes to content aggregation, two services that have gained a generally positive reaction are of course, Digg.com and TechMeme.com. Kevin Rose’s Digg has spawned many clones, and it has faced it share of criticism. Similarly, Gabe Rivera’s TechMeme.com has a habit of both enlightening and dumbing down its underlying data subset, the blogosphere.
First off: Props, Shout Out, and Much Respect
Allow me to say right off the bat that both services - and their ilk - are definitely great innovations and inventions that deserve a lot of credit. So the following is more about random observations and interesting applications to the content vs. technology / creation vs. aggregation / social media vs. technology debate and not exactly critiques of either service.
Competitive Landscape
Interestingly, since launching, Digg has had to face more than one competitor: Reddit and company are all fundamentally similar services. In fact, Time Warner itself got aggressive with stealing Digg’s thunder when it acquired Jason Calacanis‘ Weblogs Inc. and assigned him the challenging task of managing and revamping Netscape. It should be noted, by the way, that one of the first social news aggregators was in fact Drew Curtis’ Fark.com. Fark.com spawned a number of link dumps. Today many of these link dumps are the target of roll-ups, ambitious attempts by deep-pocketed parent companies to aggregate a wide array of these sites with little content, plenty of traffic, but what I suspect, overlapping traffic that has little value to advertisers (more on this in a subsequent post).
TechMeme has competition from services like Megite, Chuquet, Findory, Tailrank etc. and some of these even include voting and comment feature that blur the line between meme-trackers and social news aggregators like Digg/Reddit and company.
Scaling the Mountain
But as I have looked at the two more and more, I ask, which model scales best?
TechMeme is less than 1 year old and its traffic has risen quite well in the first half of its existence, and by the looks of Alexa, it has fallen off a bit.
Of course, I’d argue that TechMeme is far more influential in terms of becoming a daily panoramic view of who is covering what than it is in simple terms of traffic. In fact, according to Quantcast, Digg has an estimated 4.8M monthly unique users, whereas TechMeme.com has a mere 5,000 monthly unique users. It should be noted and emphasized, that Digg seems to have added Quantcast’s audience measurement code onto its site, while TechMeme.com has not. My inclination is that TechMeme.com has much more than 5K users per month… though less than its Alexa ranking of 4,842 suggests. Then again, Digg.com’s Alexa ranking of 79 is generous, but normal given its tech-skew.
Digg, as well, grew quickly and sharply, but it too has seen traffic level and fall off.
Yes, I know, Alexa is imperfect, but it’s a good source for measuring one site’s traffic over time when you account for its demographic skew, and it’s good to compare two different sites’ traffic. When we justapose one with another, you see that indeed Digg is much larger:
TechMeme.com, incidentally, is one of many projects founder Gabe Rivera manages using his algorithm, these include WeSmirch.com (celebrity news), Memeorandum.com (political news), Ballbug.com (Gabe’s a baseball fun, I presume) and of course, TechMeme.com. Judging by the graph below, you’d think Rivera stopped focusing on Memeorandum once he launched TechMeme.com, which took off subsequently.
Tech is an Oasis of Content Online
It’s interesting to note than any solution does not scale necessarily, in other words, there is something about the audience it serves, in this case technology and new media, that needs to be aligned with the platform.
This is interesting, of note, because Digg.com’s critique includes that it’s tech oriented as some doubt it would succeed in other non-tech areas.
As well, comparing these companies is downright unfair: Digg.com is financed by venture capitals and a much more established company than TechMeme.com, which seems to be a low maintenance operation with high impact. I have always appreciated what TechMeme.com has done in terms of organizing an otherwise chaotic blogosphere, but it does also create noise and blurs the originality found amongst bloggers as items tend to pile on as bloggers cover what is atop the TechMeme.com main page instead of venturing abroad to cover new, original items.
Moving Mainstream
One thing, of course, that TechMeme.com and Digg.com have both embraced is become more mainstream, or accepted by the mainstream communities.
When you look at TechMeme.com, the “leaders” are increasingly coming from established news organizations, namely the NY Times, CNN Money, Boston Globe, WSJ, etc., there are the usual bloggers who sometimes anchor news items, but their posts are usually barebones next to the news sources’.
Digg itself has been embraced by major news sources that now allow for readers to add their content to Digg, etc.
In Search of Growth
As the companies grow, Digg is under intense pressure to grow, with it being VC-backed. It apparently asked for, and did not get, a $150M buyout offer from News Corp. News Corp. bought Newroo, which is is now leveraging onto MySpace.
Of course, Reddit was acquired by Conde Nast’s CondeNet division itself. For our post on that, click here.
TechMeme.com - whose Rivera brags about wanting to take naps in the afternoon and thus does not see himself as part of a large organization - shows no sign of wanting to sell out. But that’s a guess, frankly. If the right offer came along, he might press the cash register.
How to Scale?
In the content space, you can derive a formula for growth as:
Size = Content Library x Readership/Viewership/Listenership x Platform.
It’s a time-tested model that has created billions over the decades… in the production of content space, you have a lot of value when you own the content and can exploit it in multiple formats; and of course, the higher the readership/viewership/listenership, the more you can generate revenues.
When it comes to Digg and TechMeme and their category of aggregators, of course they do not own the content, so the potential is quite different. One would argue that you can index and aggregate far more content than you can create, but the flip side is that - talk of the demise of the pageview notwithstanding - it is simple arithmetic, you have a much smaller base to leverage ad sales off.
In the aggregation space:
- Digg can scale by virtue of adding members - who in turn index more content but then what?
- TechMeme.com that it’s harder to scale in the sense that the only way to get bigger is to have a larger audience, even if Rivera indexed every single blog and source online, it would not exactly add to his size and reach, it would simply fragment the readership and update the news stories quicker.
Digg has tried to branch off to other formats like video, it remains to be seen how successful it can be. Furthermore, before Digg can really embrace non-tech areas, it needs to weed out Digg gamers who can hijack the service pretty easily.
TechMeme could technically create memetrackers for every vertical in the world, but as Rivera’s other three memetrackers show, there is something about creating services for the tech world that will simply not duplicate the success thereof in other verticals.
Potential Exits?
In the end, Digg remains one great potential acquisition for a media company looking to enter tech social media with a bang, though I doubt the VCs would be happy with the price tags that it would fetch these days. Digg really needs to ramp up traffic and revenue to justify what it’s asking for.
TechMeme.com is a wild card, I am not sure the underlying technology is that hard to duplicate, and sooner or later, there will be other services - like Megite, Tailrank, Findory and others - who might offer less noise and more originality and syphon away users.
Time will tell. Either way, the bottom line of this post is that the Web is still very young in terms of creative solutions to organize and distribute the world’s information and make it universally accessible and useful.
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