The Economics of Blogging for Attention
Earlier this week Alex Iskold wrote that there is no money for bloggers in the long tail, even if there is money from aggregating the long tail.
There are many different motivations for blogging and some do not involve money. Some people have a cause they are passionate about - they want to help change the world and a blog is a marvellous way to get attention for that cause. Others don’t even want to change the world or get noticed, they are just passionate about something and enjoy writing about it - attention is a by-product.
These bloggers may have Adsense ads and Amazon affiliate links. Who wants to turn away “no effort” money, however small? Just don’t judge them by their revenue, it is a by-product.
The bloggers who don’t have either a financial motivation or a passion, tend to move to social networks and Twitter-type microblogging models.
The bloggers who are financially motivated break down into two broad types:
1. Unchained journalists and early bloggers turned aspiring media mogul - think Mike Arrington, Om Malik, Arriana Huffington, Henry Blodget, Jason Calacanis and of course our own Richard MacManus. It is such a great business for those that make it; so many more will be tempted to try. The barriers to entry are much more than they were for the innovators in the early days, but they are still lower than most businesses and new spaces are constantly emerging. So the blogosphere will always be full of blogs with minimal revenues and big ambitions, just like we have lots of start-up technology companies with minimal revenues and big ambitions.
2. Blogging for Attention that translates into other revenue. This is simply the open source model applied to writing. Why does a software engineer spend a lot of time writing code that they give away as open source? There are certainly some who do it for non-financial reasons; they just love writing code or they want to kick an evil empire in the shins. However this assumes a day job or a rich uncle- because the huge open source industry would not sustain on this basis otherwise.
The simple economic rationale is increasing billing rates. Let’s say I am a free agent developer charging $50 per hour. If I work 8 hours and have 100% utilization, I make $8,000 per month. Now let's assume that I spend 6 months investing my time writing some code to donate to open source. I have invested $48,000 (6 months at $8,000). In reality developers will tend to “invest” their moonlight hours at evenings and weekends; and other non-billable time. So this example is just to make the calculations simple.
Now imagine that the code gets traction in the open source community (that is a big if, this only works for talented developers who choose a real problem to solve). Can this developer increase their billing rate? Can they charge say $75 per hour? If so, the developer has a Return On Investment within 12 months.
In practice, the odds of success are not good, but the upside return is much higher. The odds of success are low because so much good code is given away free that you have to a) build great code not just good code and b) be savvy about getting adoption. Free is no longer a selling feature for software.
However the return potential is also much higher. This is particularly true for developers in developing countries. Let's say I am a really smart 20 year old developer in Siberia working for a big outsourcing firm by day and hacking away my masterpiece at night. There is a big opportunity to transform my career; the per hour increase maybe 10x from $5 to $50. If I can also create an “enterprise version” that I can charge for, the upside is huge.
The economics are similar for writers who blog to get attention, in the hope that the attention can be leveraged into other revenue. There are 3 different models:
1. Corporate blogger. This is now so common in the technology and new media worlds that it is just another part of About Us. Start-ups tend to do this well, established enterprises are mostly still struggling for a formula that works in the community while meeting old management desires for control. Corporate blogging serves a useful purpose that falls between the cracks of Press Releases and White Papers (i.e. we have something interesting to a small part of our market, but not important enough to get picked up by traditional media). This is PR 2.0. The content has to be good; boring old press releases and white papers with jargon-laden corporate-speak won’t work any more. The Corporate blogger is like the Linux coder at IBM; they get a salary and blogging is just part of the job description.
2. Deal Flow Filters. Fred Wilson is a leader at this and now most VCs feel the need to blog. This serves two purposes. First it helps filter their deal flow; entrepreneurs know what will interest them and they can start an informal dialogue via comments. Second it makes the VC look like a reasonable human being that an entrepreneur will want to meet. This same model can work for others in the deal business. I can imagine an M&A banker blogging about deals they are interesting in sourcing.
3. Consultants in a Knowledge intensive space. This is directly analogous to the developer using open source to increase their lead flow and billing rate. The idea is simply to create some useful analysis/insight so that your market sees you are useful. This brings deal flow and enhances credibility (i.e. improves closure and bill rates). As with software, the nominal barriers are zero, but in practice a) your analysis/insight has to be valuable and b) you have to be savvy about building an audience. Blogging also works as a deal flow filter; experts have only so many hours to sell, so they need highly qualified leads who already know what they do well (and, critically, what they don’t do).
This last category is interesting because it has long tail characteristics. There is an almost inexhaustible supply of experts in all kinds of niches working as free agents or in small companies. I call these the Attention $ bloggers (as opposed to the Ad $ blogger).
This category also obeys its own power law - these are people who have long understood the economics of giving away content to leverage consulting fees. Nicholas Carr is a good example. His excellent Rough Type blog offers insights in a readable style with humor. The only advertising is for his own books and notice his blogging frequency is timed for a new publication. This is easier than the traditional book signing tour. The book in turn feeds the consulting practice. The Internet did not create the economics of writing for attention, but it did open it up to many more people.
Conclusion
Blogger Networks (a.k.a media firms) make money initially by attracting the Ad $ blogger. Some smarter media firms are now getting better at figuring out how to motivate and manage the Attention $ blogger. Huffington Post is one example. The management issues are complex though - the Attention $ blogger who pushes too hard to sell a service or a point of view will lose their audience and harm the reputation of the media firm/network.
What do you think? Why do you blog? What value do you get from blogging?
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A very interesting article indeed. I, personally, enjoy reading the blogs of people who blog for the love of something or who blog without the singular goal of income. A bloggers intentions are so apparent in their writing that it's almost shameful to read some blogs written by the get rich quick bloggers out there.
I have recently started blog and have been writing for 1 month or so. The blog covers web 2.0 or interesting technology news. If I think about it, there are 3 reasons I started blogging.
1) I wanted to follow and keep track of latest in happening in this area. Whats better then writing about it then reading about it from other news/blog sites?? :)
2) I have always loved writing with my other fiction writings being published in magazines.
3) Blog is a way where you interact with people/readers. Its always nice to do that!!
My blog is still a part of this long tail of blogosphere and takes inspiration from blogs like yours!! But I still think that blog and user generated content still has a long way to go.
True to the point.
Besides the fact that blogging is fun I use it as a way to represent myself and my identity.
In my work I meet a lot of time people that were introduced to me by email. A lot of the times I find that conversations starts with "I read your blog and its...".
The blog is a great way to express your personality if its for potential investors, partners and customers.
Shahar Nechmad
CEO, NuConomy
http://www.nechmads.com
Geez, I think you described all my personalities on one page.
I started the blog before even realizing it was a blog. Several years ago I started selling annual contracts providing (primarily) preventive maintenance on pc's for small businesses within my area, generating a reliable stream of revenue that could be projected out many months. Wordout began as a "perk" to inform and entertain those customers which evolved into a sales tool to boost my contract sales. The thought of promoting the blog as a "blog" didn't even cross my mind until this fall.
I find that I am one of the passionate, unchained journalists, blogging both for attention and revenue, a corporate blogger using the medium as a filter for both my readers and myself, a relative expert in a very knowledge-intensive field, and just a guy who wants to get done, before I am finished.
I am Jon, and I loved your article.
Just got to do blogging for the fun of it. You see, like everything else, if it succeeds, you will come to spend more time on it and become more engaged. If it doesn't, then no big deal, at least you expressed yourself and enjoyed it while it lasted.
Nice article, it categorized the spectrum very well.
---
Future Converged
http://www.futureconverged.com
You know, this is a great article. One of the reasons people blog is to get noticed. Writers who might want to get published, analysts who would like some airtime to share their views, and 'change the world' personalities are big 'attention' seekers. There is a good deal of vanity out there as well, but I think for the most part everyone is out seeking that American dream. To the poster above who mentioned the 'obvious' get-rich-quick schemers, I agree. There are people out there who will SEO the hell out of their blogs, bold every other sentence for keywords (even top experts do this, it's kind of pathetic, albeit profitable). Eventually, they will be crushed when they fail to reach that financial plateau. You really need a lot of passion, energy, and interest in what you're selling or the market will weed you out.
I blog to engage. If I have an idea, I'd like to give people the chance to have a look and let me know what they think. I think a personal platform is a great way of sharpening ideas and writing is actually a pleasurable exercise. Not that I wouldn't love to have an income doing something I love, and I do not begrudge any bloggers their revenues. In fact, it only makes sense that the ones who provide a brilliant insight, or a different perspective should be rewarded.
Thanks all. I think I missed articulating one key motivation, which is Blogging for feedback. Both types are great, as long as civility is maintained, the "you really missed this point, here is my experience" comment is also great. Nobody will sustain Blogging unless they actually love doing it, there are easier ways to turn a dime and the fakers will lose their audience fast.
You're spot on about #3. I write several blogs -- two are driven by ad revenue (and both work very effectively), and two are in the last category you mention. One of my blogs I write for b5media, and truth be told, I make more in an hour of consulting than I do from an entire month of blogging from them. But being part of the network increases my visibility, makes me a part of an instant peer community (and a tighter one than the blogosphere at large) and avoids the cost of hosting, code maintenance, design, etc. It makes perfect sense for me to do that blog as part of a media network, even for minimal pay, vs. trying to maintain it on my own.
Really great article.
I blog for myself as a creative outlet and I also head up the blogging and social media for Palo Alto Software. We've traditionally stayed away from a product, company based blog and concentrated on a informational blog, but we're going to start mixing things up a bit and adding more and more company culture to the blog. It's an opportunity to give the people who work here a face and a voice beyond a static "About us" page.
Blogging has always been about two things, a passion to learn and a passion to share what I've learned. I blog because I am both student and teacher, and blogging is the vehicle that is most useful in helping me learn, then pass along what I know.
I've paid little attention (though some) to making money via my blog in a direct response marketing sort of way. I have used it to establish myself as an industry thought-leader, however, which has led to consulting gigs and even a book deal.
Truth is, if I never made a dime for blogging, either direct revenue or indirect, I'd still do it. I love this medium. It quite literally changed my life.
Does it ever occur to you dingbats that the key to making money on the blogosphere, or anywhere else, is to provide content? This post seems like the ten thousandth piece of crap suggesting that marketing marketing has a there there. Long tail? That's another way of saying you're about a thousand miles behind the curve, I think.
If you're blogging to make money, you really have to hanve something to sell, yes? If you're doing it for your own purposes, then it's, uh, practice writing (imagining it's eventually salable), an outlet (imagining it's worth hearing), or maybe saying something that needs to be said (however it's actually perceived).
Anyway, good luck with that.
Good post. Good comments. But I wonder the post is a bit too much oriented to the "techo chamber".
I agree with everything you wrote except "The bloggers who don’t have either a financial motivation or a passion, tend to move to social networks and Twitter-type microblogging models."
We (Others Online) have a network of thousands of bloggers, and I see so many of them not doing it for $ but rather attention -- and their purpose doesn't fit into your 3 categories above. They're doing it to engage (just as #7 pointed out), share, to clarify their thoughts, and as a cathartic exercise.
I see that so much (in our network anyway) that I think it deserves to be called out as a 4th model.
I try not to look at my Sitemeter, I really do. But for the guy who followed, I have a special place in my heart for Middletown.
Carry on.
Bernard - great post. For quite awhile now, people have portrayed blogging as an entity unto itself. You are either a "blogger" or you're not. But I see it being integrated into a world of other activities as just another valuable tool to reaching your audience.
This is why any kind of drama around "the death of blogging" or crazy statistics around its increase or decrease in adoption are missing the point. There can be value in blogging for many companies and many roles, and so few of them need to worry about display advertising.
Have a nice evening.
Wow. I feel like the red-haired step-child. I am quite new to blogging. For me, it is a matter of just wanting to be heard, whether it be my 2 people or (wow!) 10 even! :)
Well, sometimes blogging is just a form of releasing thoughts, not really looking for readers. A blog post is short and pointed. Blogs can be a person's public notepads managing knowledge.
Well for me blogging started as a hobby and now an addiction but over the years it has made me learn about various new things happening in World in general. And now through my blog
i'm getting ideas about new startups and not to mention i do write from time to time for others including yr network readwrite web. And finally because of all this i'm now venturing into my own consulting business
Hello,
Great post. Tx. On my side I do blogging (on visualization in a knowledge economy) for 2 reasons :
1) the main reason is because writing helps me focus on what I do and what I read, maintaining a red line to attach lots of information I come across. It helps me clarify my thoughts, and provide me with a improved bookmarking tool in some way, one with sense / context attached to it.
2) the second reason is to understand the blogging phenomena by doing it, rather than by reading about it. I got to know some nice bloggers which expanded my knowledge network, people with diverse profiles and interests than my usual friend or colleague network.
Blogging is a personal / individual approach. As far as the attention $ / "open source" model is concerned, it is a corporate / branded approach, not linked to my personal identity. We at faberNovel Consulting don't do it via blogging, but via the publication of studies in PPT / Slideshare, for example on the business model of open source or the best practices of social networks (cf a recent article in RWW by Richard).