The Plateauing Out of Blog Networks
The Syntagma Story (continued)
Straws in the wind are important signals for digital farmers. They tell them crucially which way the wind is blowing, its strength, and something about the season/cycle.
There are now a lot of straws in the wind for digital networks (or, for purists, blog networks). BlogNetworkWatch no longer covers blog networks. It’s become a sort of mini Blog Herald. Many networks have shut up shop or are quietly getting on with their business underneath the radar.
So what is the state of the digital network business in these apparently doldrum conditions? As I’ve been writing here for a time, waiting for a knock on the door from the Business Development Officer of Yahoo/AOL/Google, whatever, is a sterile career move, and always was.
When Jason Calacanis announced Weblogs Inc was doing $1m a year on Adsense, followed quickly by its sale to AOL for $25m and a seat on the board, networks of content providers became the new Klondike. Lots of people moved in, including Weblog Empire (Duncan Riley) and b5media (Jeremy Wright and other names from the starry firmament). I worked for both before moving quickly on to form Syntagma Media.
Even then there were two ways you could play a digital network :
1. Build infrastucture and content platforms quickly so it stands out against the competition. Go for size and scale before anything else. Then, with a bit of luck, the BDO will come knocking on your humble door. Bingo! Blogging bliss.
2. Optimize the network for income — remember WIN was making $1m a year from Adsense alone before it sold out.
Here at Syntagma we followed Route 1, aiming always to reinvest income in exchange for size (55 sites and rising), and pushing the envelope into new fields, like network magazines and large retail portals. The business plan also included a move into IP-TV in 2008.
However, a major rethink has been forced on us through a number of events. Not the least is a lucrative publishing offer landing on my lap and, yes, straws in the wind. There are no big buyers of digital networks out there now, and even those that are sold have to settle for a bit upfront followed by a share in the income thereafter — in effect turning the owner into a salaryman of the buyer.
The really interesting point though, is that once you go from Route 1 and start exploring Route 2, something highly beneficial emerges. When you stop pouring all of your treasure into endless expansion, you discover that you can start paying yourself a handsome income just by running the network as a normal business, capping the size and scale, and going for quality and depth, rather than extension and constant revolution.
A network like Syntagma can easily pay its owner a six-figure salary (and rising) from a steady-as-she-goes policy of improvement and quality delivery. That assumes the business is around two-years old (we’re two in October) and has a bunch of mature inventory.
In the end, what you get out of a project is more important than prestige, size, or future bonanzas, real or imagined — try explaining it to your bank manager.
So that’s the subtle shift I’ve made in the running of Syntagma. From a network that, at its peak, employed 15 authors, with five vacancies outstanding, to a trim 30 to 40 sites with maybe six high-quality freelances working. We are now a medium-sized digital publisher aiming for depth and quality. One that pays its owner a decent salary, allowing him to spend time on the book deals.
I’m guessing that many network owners have already come to the same conclusion. It’s not astro science after all. If Route 1 seems like a distant dream, even a total mirage, then Route 2 holds some surprises in store. It’s the old bootstrapper’s adage that, the lower your costs, the less you have to turnover to get into the comfort zone. Syntagma is now officially a Route 2 business. Our motto is :
Mind you, if any BDOs are in the area, do drop into Syntagma Towers for a cup of tea. (The champagne has already been auctioned off).
That’s pretty cool John….nothing wrong with Option #2.
I’m thinking that everything changes so fast in the blogosphere and it will continue to evolve.
Me, I enjoy writing ArtNewYorkCity.com either way.
By Webmetricsguru on May 28th, 2007 at 12:58 pm
Good to hear that, Marshall. We enjoy having you around too.
I must say it will be a relief to settle into a daily routine rather than scampering round rolling out new ideas every few days.
By John Evans on May 28th, 2007 at 1:05 pm
[...] Continue Reading [...]
By Moneyizor Network Magazine » The Finances of Blog Networks on May 28th, 2007 at 2:15 pm
You’re telling me that SM could pay you, John Evans, six figures? That’s really interesting. Where is your revenue stream? Adsense?
I mean, I dont’ doubt you’re making money. But when I sense that you’re sensationalizing matters, I have to ask questions…
By Aaron Brazell on May 28th, 2007 at 2:16 pm
It’s true, Aaron. There’s a lot of accumulated revenue from around the inventory.
I don’t sensationalize, especially when low six-figures is not that much for a 100% shareholder. Anyway, that wasn’t the main point of the piece.
By John Evans on May 28th, 2007 at 2:19 pm
How much do your authors earn off of that 6 figures?
By Jeremy Wright on May 28th, 2007 at 2:53 pm
I’m not discussing numbers, Jeremy. In any case the authors cut is separate from what I’ll be receiving in future.
By John Evans on May 28th, 2007 at 3:02 pm
Yeah, that was kind of my point.
Besides, how you made the leap of faith from “my model didn’t work” to “blog networks plateau’d” is beyond me…
By Jeremy Wright on May 28th, 2007 at 3:05 pm
It’s working very well, but only when you step back from the size-is-everything model and see that you’ve got a very nice growing business capable of providing a decent income.
By John Evans on May 28th, 2007 at 3:10 pm
To you. I’m sure writers appreciate that while they’re making dollars are day you’re pulling down 6 figures.
By Jeremy Wright on May 28th, 2007 at 3:41 pm
That’s a very ignorant statement given that I’ve worked full-time for 18 months without pay, and now write quite a number of the sites myself.
Our writers only put in an hour or two, and receive 75% of the revenue to their sites, the best cut in the business and a larger percentage than b5 pays.
By John Evans on May 28th, 2007 at 3:45 pm
75% is larger than b5 pays? Really? You’ll need to prove that one mate.
By Jeremy Wright on May 28th, 2007 at 3:47 pm
I’m too busy to engage in sterile debates, Jeremy.
By John Evans on May 28th, 2007 at 3:54 pm
Don’t start something you can’t finish John
End of the day, you’ve moved models. Congrats. But that doesn’t mean the industry is dead or plateau’d or anything.
By Jeremy Wright on May 28th, 2007 at 3:55 pm
I’m describing my own situation here, in the light of what I’m seeing in the business climate. By switching from an innovation-driven model aimed at eventual sale, to a quieter, quality/depth model aimed at income, I gain a great deal personally.
And you don’t have to compete with me anymore.
By John Evans on May 28th, 2007 at 4:05 pm
If it’s only about you, theb you shouldn’t: 1) make your title about the industry and 2) make half your post about industry changes.
By jeremy wright on May 28th, 2007 at 4:20 pm
Is b5 now censoring commentary on the blog network business? I think I have as much entitlement as you to make the points I have, or any others.
By John Evans on May 28th, 2007 at 4:25 pm
Censoring? I always did appreciate your sense of humour.
To repeat: you’re defensive, you say you were only talking about yourself so we should back off..
All I said was if that was your goal you should not title the post that way, not tag other networks, not say the whole industry is dying.
Simple. If you’re only talking about you, then just talk about you.
But if you talk about others, don’t be bewildered when those others slap you for being a git.
By jeremy wright on May 28th, 2007 at 4:56 pm
Plateauing, then, is “the dying of an industry”? Who’s defensive now?
Realism is the survival of an industry.
By John Evans on May 28th, 2007 at 5:02 pm
By definition, a market that has stopped growing and innovating is dying.
Don’t get snippy at me because you use sensationalist titles john.
If your post was designed to announce a change in direction, and that was it, then you wouldn’t have tagged b5 used a sensational title, etc.
No, john, this is you once again painting your decisions around how badly the industry is doing instead of just talking about you.
This is supposed to be the syntagma story after, right? So why is all of your reasoning about what others are doing?
By jeremy wright on May 28th, 2007 at 6:14 pm
Ever heard of context, Jeremy?
By John Evans on May 28th, 2007 at 6:26 pm
Ever heard of relevant context, John?
By Jeremy Wright on May 28th, 2007 at 6:35 pm
Jeremy, I can sense your disappointment at the way things are going. You’re right. But it’s always best to face up to reality. If you didn’t think I had a point, you wouldn’t be hammering away here, would you? Hmm?
By John Evans on May 28th, 2007 at 6:47 pm
Ah yes, tacit agreement through disagreement. I’d forgotten how that worked.
Again, I’m happy for you that you’ve decided to focus your business for your own personal reasons so you can make a great living for yourself *and* focus on your writing.
But none of that has anything to do with the industry. An industry that’s growing incredibly fast (20%+/month) and gaining massive visibility in the MSM, mainstream readers, partners, etc.
It isn’t plateauing. And your choice has nothing to do with the industry. Your choice has to do with you wanting to write your books and make decent money as well. That’s the core of your post.
If all you’d said was “great opportunity, always wanted to write books again, want to keep the network, so I’m taking it from being an expansion-based business to a regular revenue-generating” one nobody would be arguing with you. Everyone would be cheering.
Instead you choose to paint the entire industry in a light with no data to back it up. You say you pay more than we do with no data to back it up. You try and say I can’t comment even though you’re commenting on the whole industry *AND* you specifically mentioned my company.
Don’t try and flip this around. Any dissatisfaction is entirely on your end. My response is simply not allowing you to paint an industry you’ve never participated in and trying to simply get you to admit in public what you’ve already admitted in private: that you’re doing this change because of the book deal.
I had a nice big congratulatory post ready for Ensight, but that’s basically useless now.
Good luck in the future John. I’m sure the publishing industry will enjoy having you back.
By Jeremy Wright on May 28th, 2007 at 6:54 pm
This is the publishing industry, Jeremy. And all business decisions are personal ones when you own the business.
As I said before, this is a sterile debate because it’s based on two entirely different points of view. I’m sharing my particular viewpoint with people who read what I write. You are defending what you believe your experience tells you. Why then do I detect a cracked chime in the bell?
By John Evans on May 28th, 2007 at 7:09 pm
Maybe you’re tone deaf from listening to yourself too much.
This has nothing to do with viewpoints. When you’re talking about yourself, talk about yourself. When you talk about others, don’t be surprised when they comment. When you say an industry has plateau’d, supply data to back it up. And when you say you’ll be earning 100K+/year, in a plateau’d industry, your partners, advertisers and writers probably wonder where the money’s going.
By Jeremy Wright on May 28th, 2007 at 7:12 pm
Now you’re being abusive. You forget I run a very tight ship with few expenses.
As for the industry, I was talking about “straws in the wind”, not so-called statistics which seem to change on a daily basis depending on how much interest the writer has in a particular point of view. Those who work closely in a business get a gut feeling about it without waiting for consultants to write a long report justifying whoever happens to be paying them.
Remember what Jason said? I won’t repeat it as I’m sure you remember. I’m not getting at you, just suggesting an alternative way of handling current conditions. It may not fit your assumptions of the future, but it’s a good outcome for me.
There’s a lot of mileage yet in the online content business, it’s just not in the big multi-million buyout. We really have to be realistic, that’s all. If you can’t move forward and don’t want to move sideways, then move diagonally in a forward direction. in the end, it’s probably just as good.
By John Evans on May 28th, 2007 at 7:23 pm
Have a nice day John. After all, raising VC funding was going to see me fired, the company taken over by the VC’s and all creativity at b5 killed, so your ability to predict any company’s future but your own has so far proven fairly minimal.
Make your decisions because of your experience and expectations. But those decisions and experiences have nothing to do with b5media, where we’ve come from and where we’re going.
By Jeremy Wright on May 28th, 2007 at 7:30 pm
Here’s an algorithm for you :
Q1 - Do you think that b5media can be sold for a large enough sum to give everyone concerned a good payout?
If yes, then why do you care what I think?
If no, go to Q2.
Q2 - Do you think b5media can be run as an ongoing profitable business for all participants?
If yes, you’re in exactly the same position as Syntagma.
If no, you’re even more pessimistic than I am.
So, where are you, Jeremy?
By John Evans on May 28th, 2007 at 7:48 pm
b5 could have been sold for 4MM$ last fall. Why do I care? Repeating myself (for the 5th time): because you generalized the industry and slammed my company. If you ever learn to stop doing that, you’ll completely avoid any dissent in the future.
By Jeremy Wright on May 28th, 2007 at 7:50 pm
But if you’re secure in your belief, surely my views are of small concern?
I didn’t “slam” your company. Why would I do that? If you sold for $20m, say, it would boost the whole sector, including Syntagma. I earnestly want b5 to be a mega success.
But I do like to be realistic, not fanciful.
Pax, Jeremy? We’re in this together whether we like it or not. Your success is mine, mine, yours.
By John Evans on May 28th, 2007 at 8:04 pm
The term “blog network” has so many different meanings today that you can’t place them all in the same boat. To generalize in this case would be foolish and irresponsible. Personally, it would depend on the niche, it would depend on management, and it would depend on the goals and purpose of a network.
Personally, I think blog networks are not dying. I do believe the dynamics have changed and therefore leadership must shift their approach but isn’t that good management? The only thing that is constant is change. Industries shift and move and to say that blog networks are dying is like saying retail stores are dying.
Well on the contrary. I see exciting things happening in current blog networks and solid growth.
By Steve Remington on May 30th, 2007 at 6:45 pm
I’ve never said blog networks were “dying”, Steve.
With Shiny Media raising $4.5m, and b5 $4m, there’s clearly still a forward movement there. I’m very optimistic about digital networks, but I think it’s not in the expected way it was a couple of years ago. It’s more like the hard grind of a normal business than the gold rush that followed WIN’s sale to AOL.
And what is wrong with that?
By John Evans on May 30th, 2007 at 8:29 pm
We must be playing semantics games because something that is slowing down is dying, even in the world of science and physics. I read your article as blog networks aren’t necessarily “dead” but “dying”. In other words, plateauing….
Either way, I understand your point but I still think that the word “blogs” and the term “blog networks” brings forth a much wider meaning these days so to really lump them all together as sharing the same fate is really kinda silly.
By Steve Remington on May 30th, 2007 at 9:27 pm
Okay, that’s Jeremy’s point, but some businesses rise and fall without dying : the stock markets, property, commodities. Digital networks are clearly like that, since content will always be required online. It will just vary in how it’s presented, that’s all.
By John Evans on May 30th, 2007 at 9:33 pm