Kara Swisher reports that Tech Crunch is raising $15M on a $35M pre-money. That is $10M more than what Weblogs Inc. sold for… and much much more than Rafat Ali’s Paid Content raised from VC dean Alan Patricof a couple of years ago.
I find it interesting that Tech Crunch’s post on fundraising vs. rollups vs. sales to big media companies came around the same time that Federated Media’s supposed $30M financing deal on a $200M valuation.
Why I find this interesting is that while Federated Media does not handle exclusive ad sales for these blogs, FM serves as a bellwether for them all. It reps Tech Crunch, Silicon Alley Insider, Giga Om, etc. on a non-exclusive basis… yet all of them have developed in-house sales teams, as well… which begs the question: why?
Presumably, FM is not doing as much as the bloguls would like, which means that FM isn’t doing as well as it would like… especially when you consider that it takes 50% of revenues, at most.
I don’t mean to disparage FM or the blogs, I think FM is a great company and their blogs are fantastic.
But am I the only one that sees this entire landscape as one big cesspool?
Arrington admitted the sham-like methods why one blog links to another. I respect the men behind these blogs individually - and they have all built mini-empires - but I agree that readers don’t care about the politics (but they do about the business of, hence this post) and this makes everyone look like clowns.
Anyway, as an ad rep firm, FM gets an RFP (request for proposal) from HP for $100,000 and then splits it 10 ways between Tech Crunch, GigaOm, Alley Insider etc. FM gets 50% and the blogs get 50% divided amongst them.
At the next merry-go-round, the blogs don’t like that they each got $10K (for example), so they set up independent sales teams… and then go after that $100K RFP directly. Next time around, FM gets $50K of the spend and the blogs split up the remaining $50K.
What the ?
The pie might grow over time, but not by much… what I think is happening is that some of the bloggers don’t like to hear that FM is raising mega money and they want a piece of the action, too.
I am not the only one that finds this crazy, thankfully… but I see why the desire to raise money comes in, because these blogs write largely about the same things, they are highly dependent on one person, and the technology space is too niche to really make it valuable enough for VCs to back.
I would be surprised to see Tech Crunch raise VC money (they might and will because the Silicon Valley moneymen would love to have Arrington under their control) but despite hiring the very talented and connected Heather Harde and recruiting gifted writers like Erick Schonfeld, the company has not raised outside funding. Trust me, I know fundraising takes time… but if TC was close to it… why the crazy post yesterday? In no way is that a criticism of TC, Arrington, Harde or even blogs… it’s that VCs won’t see the kind of growth in blogs that they can get elsewhere, even though, let’s face it, VCs track record is abysmal.
I personally see TC selling to a media company like CNET or someone else (which makes yesterday’s rant that much crazier… and that’s why we love Arrington, frankly).
All in all, VCs and content do not really mix… and VCs and blogs mix even less. Just because some VCs have invested in blog networks does not mean that the payoffs will be there. They might in some extreme cases, but I think that ship has passed.
Mind you, one leading blog that up to now remained a one-man shop just catapulted into a business, with numerous authors and plans for expansion. Check out Allen Stern’s plans for his Center Networks. Allen maintains one of the better blogs out there on product and technology news, we expect good things to come from him and his team.
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March 20th, 2008 at 4:22 pm
Here’s my take of what’s going on in the blog business:
http://sramanamitra.com/2008/03/12/deal-radar-2008-federated-media-needs-to-focus/
http://sramanamitra.com/2008/03/20/deal-radar-2008-gigaom/
http://sramanamitra.com/2008/03/20/deal-radar-2008-techcrunch/
http://sramanamitra.com/2008/03/11/deal-radar-2008-glam-medias-fashion-forays/
http://sramanamitra.com/2008/03/10/deal-radar-2008-adifys-market-taking-time-to-develop/
http://sramanamitra.com/2008/03/06/deal-radar-2008-seeking-alpha/
Sramana