Blogs are attracting VC money

SFGate, the San Francisco Chronicle online newspaper, has a Sunday article that I've been anticipating -  Yes, some blogs are profitable - very profitable.

Valuations of blog have always been mysterious, and the article is the first I've seen in recent major media to broach the subject. Here's what the article states and the parallels to real estate blogging:

Blog based media is gaining fast on traditional journalistic media
More quickly than most anyone imagined, blogging is growing up. From the blogosphere's anarchistic roots, a professional cadre is emerging that is creating an industry whose top-performing businesses now earn serious money. The industry is expanding at warp speed. Blog-based media could just be poised to elbow aside traditional print and broadcast outlets to become one of the dominant sources of news, information and opinion, many observers believe.
By extension, blog based real estate content is poised to become a dominant source of news and information for consumers.

Blog networks are the next evolution

As blogs mature and start producing good cash flow, they often create additional blogs or new sites, forming networks with multiple products and a common brand identity. For example, GigaOm now offers four additional blogs, all with a common brand, and its staff has grown to 10 full-time employees. "You're seeing small media groups being created," said Paul Walborsky, GigaOm's newly hired chief operating officer. "This is the next evolution."

The development of blog networks as media properties parallels that of multiple real estate blog "networks" including Inman News Blog, Active Rain, and Rain City /Bloodhound. Even local blog networks like Homescopes may expand and develop media value.

Blog networks are attracting $10+ million valuations
Such growth has made it easy to raise money. Sequoia Capital, one of Silicon Valley's top venture firms, has contributed almost $10 million in two rounds of financing [in Sugar Inc.]. And NBC's digital media unit, which owns the women-oriented Web site iVillage, invested a little more than $5 million this year, agreed to sell advertising for Sugar sites and is distributing Sugar's content across its properties.
This is $15 million investment into a celebrity gossip blog network... quite remarkable.

A cautionary tale - blog networks are still in their infancy. Active Rain's efforts to monetize their blog network still remain elusive (but a fertile playing ground for a new business model).

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  • 10/22/2007 11:37 AM John Schroeder wrote:
    Great post. Another reason that the early adopters who have carved out a little niche have an advantage. "Little Media Groups"- I love it.
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  • 10/22/2007 2:25 PM Brian Wilson wrote:
    Amen! It’s a great feeling being involved in such a potential-laden facet of the World Wide Web. As we stand on the ever-evolving edge of the blogosphere, let’s take the time to appreciate what has already happened as a result of blogging: sharing ideas, networking and building relationships, among other things. Looking forward to what’s next!

    Brian Wilson,
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  • 10/28/2007 4:31 AM Ginger Wilcox wrote:
    Hi Pat. It will be interesting to see how individuals fare in blogging as big numbers start to get thrown around. $15 million for a celebrity gossip blog. WOW!
    Reply to this

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