Sucks to be a Blog Network These Days

Having come from the blog network space, I have a mostly unique understanding of the difficulties encountered when running a content business. There is always a war between traffic and community, profitability and loss, long term projections and short term realities. It’s not an easy business.

It’s even more challenging when you’re a blog network. Unlike more traditional style content companies like Newscorp (owners of MySpace, and or the New York Times, blog networks attempt to take a relatively new medium, a blog, and lump it together with other relatively new media – blogs. There’s no counter-balance of strengths and weakness. They are all blogs, possessing the same inherent strengths and weaknesses.

One of the core problems with the “traditional”, if there is such a thing in the space, blog networks – and really any online media – is that the business model almost always comes back to advertising models of revenue generation. Historically, the advertising market has come and gone in a predictably cyclical way.

As expected, the advertising model is taking somewhat of a hit during these difficult economic times and only in the past two days, two major media players in the blog network space have had to cut pay, create layoffs or otherwise cut costs due to an impending, or in some cases already present, decline in online ad revenue.

Gawker Media, the second largest blog network and home to industry favorites Gizmodo, Gawker, Valleywag and Lifehacker has announced a restructuring of staff – laying off 60% of Valleywag staff, as an example, and increasing the staff on their flagship properties. Consolidation is the name of the game in this case.

Likewise, b5media (with whom I worked for several years), had an internal memo leaked (and TechCrunch published) describing a complete revamp of their compensation system “to reduce costs”. Many bloggers are taking significant pay reductions as the company streamlines their burn rate.

This on the heels of AOL/Weblogs Inc layoffs and pay reductions a few months ago and the very public walk-out of Profy staff when pay was to be reduced shortly thereafter.

Let me be clear. If you’re in the content space, you are dealing in a non-tangible asset. Therefore, the economic rules of asset valuation do not apply. There is no “market price”. There is no assessment value. There is no depreciation. If anything, content can appreciate over time. Typical rules do not apply and in a market where investors, advertisers and publishers are trying to identify concrete ideas and assets that they can count on as a sure investment, non-tangible assets will always take a hit.

Publishers, particularly publisher networks, have to look around and identify means to continue to generate non-tangible assets cheaply (yet fairly), and I imagine some models might end up looking to non-tangible compensation (such as community benefits) to acquire new publishers and content.

Problem is, bloggers have this idea that they can be rich by blogging. Some are smarter and think they can simply “make a living” by blogging, without ever uttering the rich word. Truth is, unless you’re a few important people in the world, it’s not happening. It won’t happen. There are other meaningful ways to benefit from blogging, and most of them are non-monetary.

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Aaron Brazell

Aaron Brazell is a Baltimore, MD-based WordPress developer, a co-founder at WP Engine, WordPress core contributor and author. He wrote the book WordPress Bible and has been publishing on the web since 2000. You can follow him on Twitter, on his personal blog and view his photography at The Aperture Filter.

12 thoughts on “Sucks to be a Blog Network These Days”

  1. The interesting part is to see if the other blog networks follow in line, or if they turn around and try to keep going with what they have. This might be a good business decision, what will be interesting to see is how many others follow suit. Is this just the opening shot?

  2. What I like about blogging is that it is a great way to share ideas, experiences, and opinons. If someone makes a little money here and there, fine. But for me, blogging is about getting to share opinions with other people. I think that enriches life, sharing opinions!

  3. I have the same advice for content folks as I did during the dot com bust. Tighten your belts but stay in the game. Those who continue publishing and maintain their properties will be in a good position when things turn around. Likewise, this is a good time for new people to get in if they are willing to tough it out at first to establish themselves. This thing could last a couple of years and if it does were going to see a lot of big, slow companies losing faith creating opportunity for smaller more agile companies. I'm not saying it's going to be easy and I agree 100% with you but I'm also looking at this as another opportunity. I missed the last one, I won't miss this one. Just my two bits.

  4. You have made some good points, but, the fact is that some (not all) bloggers do and can make money. Maybe not an income, but at least a little spending money. Blogging isn't for everyone, but to say that they won't make money isn't true. Blogging should be done for the fun of it, a place to share your passion, and then the monetary value.

  5. It's unfortunate that they had to cut back on the very thing that feeds them: content. Taking that out means they must have thought of something “creative” to deal with the problem of no content = no traffic.So if they went that far, the same creativity will bring them back out of this. Sad that all the networks know how to do to monetize their sites is sell advertising. Really sad.

  6. I'd remind you that in any content organization (at least most), only onething feeds them – ad revenue. Everything else takes the bottom line down -including content.

  7. Aaron, this is a perfectly reasonable post with a strong collection of examples proving the point. But as the editor of Profy I would like to share my opinion here: it is not always necessary that cutting costs is a negative thing for a network, it is usually done for good and rarely anyone actually aims to hurt bloggers – they are offered some alternatives that are related to performance. But the problem is that bloggers often are not prepared to work to achieve the performance required for the blog network to be a healthy business – and this is where I see the reason for B5 media actions. They simply want to make sure that the revenue they get is better related to what the bloggers earn. I don't really understand why we should sorrow for the blog networks when all they do is building healthier businesses. The only thing we should be sorry for is that these businsses were not initially launched with this goal and with a good estimation of revenue/costs.

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