It's funny that I posted the
PlentyOfFish.com post not long before the Scoble-leaving-Microsoft
announcement predictably blanketed
Techmeme. Because reading Robert's
latest post about his decision made me think about the fundamental reason
why 'Web 2.0' is (dare I say it) in bubble phase right now. It's the exact same
reason the Dot Com bubble occured - Page Views... which in this
era leads to ads, but more on that in a minute.
In my previous post PlentyOfFish owner Markus Frind boasted about getting 500 million page views a month, more than Digg's 200 million. But even small blogs are posting 6-figure monthly page views these days - TechCrunch says it gets 3 million and Robert mentioned a video blog called Rocketboom that gets 9 million per month:
"Yesterday I was talking with Amanda Congdon, one of the co-founders of Rocketboom. Her videoblog is now seeing about 300,000 viewers a day. That's, what, a year or so old? Did you know that advertisers are now paying her $85,000 per week? That's almost as much money as I made in an entire year of working at Microsoft."
So Amanda is making $4.4 million, at least, a year from advertising - on her blog. I presume that her hosting costs are pretty significant though, because she runs a video service. But still it'd be a very healthy profit.
It just shows you the opportunities are out there to make significant money on the Web, which is - let's face it - driving a lot of this 'web 2.0' mania. Oh it's a bubble, for sure. But it's funny that this page views model is at its foundation almost identical to the Dot Com days (bubble 1.0). Drive as many users to your site as humanly possible - that's the modus operandi of all websites, web 2.0 or not. The main difference I can see is that in the dot com days, this rush for page views was a 'land grab' and there wasn't as big an opportunity to monetize it with advertising. The idea back then (late 90's, early 21st century) was to gather as many users as possible and then do an IPO - monetizing would presumably come later. Which actually has worked out to be the case for the survivers (Amazon, eBay, Yahoo, etc).
These days, 2005-06-onwards, the idea is very much to - you guessed it - gather as many users as possible. Only this time you can monetize them with Google ads, or your own advertisers/sponsors. You can go after a mass market (like PlentyOfFish) or a niche market (like TechCrunch). There are many more niche opportunities, obviously. Either way, as PlentyOfFish.com, Rocketboom and all the other success stories of this age are proving - there is big money to be made with relatively small-scale operations.
Robert Scoble and PodTech.net are after a slice of that action too - and good luck to them (they're both Web 2.0 Workgroup members btw). I think all of us small bloggers or developers are looking to grab that brass ring too. It's all about the Page Views - always was and probably always will be on the commercial Web. Well to a lesser degree, it's also about the RSS impressions - which are beginning to be monetized too. In time I expect RSS impressions to be a 'first class citizen of content' too, but for now it's page views that are fueling the new bubble - again.
The larger question is: can the online advertising business be sustained at this level (which we got to thanks mainly to Google)? I don't know, but a lot of people are enjoying the ride right now - and there are too many brass ring opportunities still out there to get too cynical.
Photo: Brian Oberkirch
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They don't get that much money every week and there are five people producing Rocketboom, all get paid for their work. There's also an office. So they don't rake in huge bucks, and they have substantial overhead. People think it's just Amanda. I guess it looks that way but appearances are deceptive. She's the star, but only part of the operation.
Posted by: Pinky Riordan | June 11, 2006 7:10 PM
Good points Pinky - yes the overhead for them sounds big.
Posted by: Richard MacManus | June 11, 2006 7:15 PM
Where are the next Amazon's and Ebay's out there? Advertising can't be the only way to run a web business, can it?
Posted by: Hashim | June 11, 2006 10:02 PM
Hashim,
Exactly...what happened to just making money with an actual plan? Advertising may make Google a lot of money, but its not going to work in the long run for these niche sites. What about plentlyoffish? Who would advertise on there other dating sites? The only way they are going to keep a solid business is by getting there users to pay for features.
Posted by: Michael | June 12, 2006 12:17 AM
I have yet to see a single vid with an ad on it. I know they went and auctioned off their first ad a while ago. At 300k pageviews/day * 7 = $41.00/CPM
No one is going to pay those rates over the long run in a market that normally commands a $1.00 CPM. I'll also mention I can't even find the ads on her video blog, so who is going to pay for something you never see?
I can't even see digg making more then $500/day, tech people don't click on ads and i've seen many people complain that when they get dug to the mainpage the traffic they get doesn't even pay for the hosting costs as no one clicks. I suspect techcrunch probably brings in around $800/day or more.
Posted by: Markus | June 12, 2006 12:18 AM
Digg is a member of FM Publishing (as am I), so I know they're getting some CPM ads - as well as the google ads. Digg is still substantially bigger than TechCrunch too, as digg has 200 M per mth, whereas TC is 3 M. TC does have the sponsor ads though, which bring in $7500 p/mth (*4). Plus the other ads. So TC is doing well over $800/day. I'd say that digg isn't yet as optimized as TC in terms of ads, but I'd be very surprised if they're only bringing in $500/day.
Posted by: Richard MacManus | June 12, 2006 12:28 AM
Services like Myspace shout about their page visits - and services similar to that do too. This is especially annoying when on pages like that you need several pages just to do one thing.
Checking in on your friends everyday with their Myspace page is not viewing the page and the advertisement. Doing x steps to do a posting is not about seeing x advertisements.
We will see where this leads. :)
Posted by: Nicole Simon | June 12, 2006 3:41 AM
I think we are calling it a bubble too early by forgetting one tiny detail: services are run at low cost and by small bands.
Secondly, the crowd is open paid subscription. Just ask 37 Signals.
Now if paid subscription model can't apply to a magazine/blog type website, then I agree... it will indeed evolve into a bubble.
Posted by: GRex | June 12, 2006 7:05 AM
Sorry, but Google AdSense isn't a great way to get money. As Markus has said, his CPM rate is well below a dollar, whereas most 2.0 publishing companies are shooting for the 6CPM+ range (we're just now crossing this barrier - largely because we're now pushing 20M+ pages/month).
In terms of the ad dollars crashing, you really need to look at it in more traditional media terms: multiple streams of income with multiple tiers of suppliers.
While we use AdSense, they're our third-tier supplier (direct sale, then on-site campaigns with ad networks like Pheedo, then AdSense and other ad networks).
Posted by: Jeremy Wright | June 12, 2006 8:49 AM
Ha! Richard, how funny. I've been thinking about this exact same thing, but mostly with Mike Arrington in mind:
http://blog.simpy.com/blojsom/blog/?permalink=
Mike-Arringtons-Business-Model.html
I agree with you, it's still all about page views, and about minimizing costs. I think Mike Arrington nailed both.
Posted by: Otis Gospodnetic | June 13, 2006 12:17 AM