It’s always good to read someone writing on blogging as a business out of genuine experience. Especially so in the blogosphere where fantasy often rules and where most business/blogging websites serve up theory and wishful thinking.
Jason Calacanis gives us a masterclass in how to go to “Step 3″ in a business based on blogging. “Bottom line: There is a huge difference between making a living and making a business.”
His starting points are the activities of Rafat Ali of PaidContent.org and Om Malik of GigaOm.com, who are moving up from mere “monetization” to a media corporative business model. Rafat is said to have raised < $1m seed venture capital. Judging by what he intends to do with it, he must be tossing quite a bit of his own sweetcorn into the mix.
Jason is not concerned with the starting out phase characterized by sharing advertising income with a middleman. Indeed, he questions the validity of these operations to "real" businesses. He particularly singles out John Battelle's Federated Media and wonders why it exists at all.
Real businesses bypass the FedMed repping stage and sell advertising themselves through in-house staff. This will lower costs from 40pc to 15-20pc, he says.
Jason's new model is:
1. Start a blog with adsense and make spare change.
2. Scale a blog to 250k to 1m pages a month and become big enough for Federated Media, AdBrite, and Blogads to care about you (i.e. sell you're inventory) -- now you're making a living.
3. Scale over 1m pages a month and become big enough that you can afford your own sales group and fire Federated Media for taking 40pc of your money because your cost of sales will be 15-20pc as a stand alone business.
A few of the blog networks around are on the cusp between Steps 2 and 3. You can almost hear them wondering where to go next. Offers to join an existing group and share the selling of ad space are tempting and have the additional merits of familiarity and providing a broad comfort zone. But like Real Men, Real Businesses don't go there.
The next stage costs money, of course. You're taking on professionals and pro infrastructure and that never comes cheap. You're scaling up from home-office to a suite of corporate cubicles and embossed business cards. Is that what you want? Rafat and Om clearly do.
The alternative, of course, is to sell up at the moment when your potential is apparent but not yet fully realized. The capital you make can then be used to seed another operation that takes you through the same process but with a more refined sense of what you're doing. You become a developer of businesses rather than a real business owner.
My particular interest -- as is Jason's -- is in the fate of the hardy individuals who go beyond Step 2 into the corporate loneliness of Step 3. What particular skills are necessary for the particular type of business we're considering?
It's not "blogging" anymore, or just writing, or gaming Google, or "working with partners" to sell advertising. It's publishing. And whatever the fancy trimmings the Silicon Valley guys add on to it, you'll need the skills of an old fashioned publisher if you really intend to succeed.
Look at any successful media business and you'll find a brilliant publisher at its core. Take away the buildings, the rest of the infrastructure and the great wodge of personnel beavering away on peripheral tasks, and the heart of the enterprise is exactly the same as it was when the original John Murray looked at the works of Lord Byron and Jane Austen and could hardly believe his luck.
Many blogs and networks are boring and derivative. It's all the same old tosh. I'm not being snarky here, just frank. These firms won't make it because they lack the great publisher's flair. Blogging as a business is about publishing, not churning out content to attract search.
So, Jason here's Step 4. You're a standalone company, selling your own advertising space around content of some kind. The spotlight now is on your publishing skills, because it's world-class writing and execution that will mark you out from the mass-media cloud.
