Another week, another blog network wraps itself up. This time it’s the business network, Know More Media, which was particularly hard hit by Google’s ranking penalties.

Like BlogNation, a UK-based outfit, they simply ran out of money. I can think of many others that suffered the same fate, but will spare you the litany.

Even the few networks that professionalized themselves by raising VC funding and bringing in experienced managers, are finding the going tough right now. Earlier predictions of another dotcom bust are not off the table yet.

I’ve written many pieces here over the past three years on the choices faced by network owners and the chances of success. Most warned of this present crisis. As a result, Syntagma was ahead of the pack in diversifying into specialist information products on subscription terms. We have not yet felt the full force of the U.S. recession-in-progress.

The coming steep downturn in the UK will have minimum effect on us, except if the pound sterling falls relative to the dollar, in which case we will see our income rise on a windfall.

In America, the startup industry is losing momentum fast, although there’s no shortage of brave souls willing to chance more than their arms.

So, what’s to be done if you have invested heavily in an internet business, whether content or blogging-based or not?

The answer is to spot the second bounce of the ball.

As the economies eventually begin to turn around and a slow recovery takes place, most people will be looking out for “little green shoots” to signify a return to economic growth. In the early 1990s those shoots were a long time coming, and when they did, they grew slowly like hardwood trees, not the swift pines we were hoping for. I suspect the little shoots will keep us waiting even longer this time.

Green shoots may be interesting, but watching for the second bounce of the ball is usually more profitable. If the first bounce online for many of us was mass publishing technologies, what could the second be?

Providing content on your own platform as both writer and publisher makes sense because it cuts costs. Hiring other writers to do it for you made sense three years ago, but with advertisers shunning small-to-medium operations it’s probably easier to flip burgers.

Now we need a second bounce to reflate the whole business of working successfully online.

Forget social media. Maggie Jackson’s book Distracted: The Erosion Of Attention And The Coming Dark Age highlights the price we pay — including actual brain damage — for standard multi-tasking and trying to keep abreast of the information space.

As in my own book on the subject, Mediate Yourself, this is now becoming a common theme whose time is about to come. Finding ways not just of sifting and processing information but relating it to people’s essential requirements is a major path forward. Limiting individuals’ needs to interact with screens is probably more relevant still.

Simplifying the lives of knowledge workers is the big leap forward that will take us to the next level.

So far technology and software have complicated human life immeasurably. The constant pressure to upgrade and learn new tricks is mind-mashingly painful for most people — hence the brain damage.

The truth is, there may be no single second bounce this time, but a series of mini-bounces, with no one golden goose presenting itself for carving.

At Syntagma, we have our eyes on a variety of possibilities. To use a rugby term, all it needs is for someone to pick up a ball and run with it. As I write, there are not many runners out there.

Oh well, I’ll just have to do it myself, I suppose.

TechCrunch is reporting that secret merger talks between blog search engine company, Technorati, and Canadian blog network, b5media, have collapsed.

The reason given was a personality clash between b5’s CEO, Jeremy Wright, and Technorati’s Richard Jalichandra and, according to b5 “a lack of transparency on Technorati’s part during due diligence.”

Judging by that, this “merger” didn’t really stand a chance. One wonders if Technorati took it seriously.

Toronto-based b5media has apparently been looking for “merger partners or acquirers” after failing to raise more VC money — it has so far received stage-one funding of $2 million. It seems Technorati has also had its financial problems.

The notion of a mass roll-up of blog networks to make ad sales more attractive and economical has been around a long time. Personally, the dynamic of that approach has still to be proved to me, especially in the current financial gloom.

Technorati has a big name, but is largely associated with a failure to live up to its billing. B5media has relentlessly stuck to its remit and expanded to 340 blogs.

I’ve long since lost faith in this horizontal model, which basically claims that small-scale content sites multiplied n-hundred times add up to a better business than three or four wowsers, or a tight-niched, product-based network, like Glam or TechCrunch. In this case, less is almost certainly more.

No “blog” network has really scaled up to the point where direct-response ads can be replaced with brand advertising. To sustain a company the size of b5 in personnel terms alone, that’s what it takes.

I’ve no doubt b5media will disagree, but they are faced with a double whammy : the brick wall of scaleability in the middle of a credit crunch.

Declaration of interest : I worked for b5media for a few months when it started up, and I am now the owner of a rival content network, Syntagma Media.

Last Christmas I wrote a post with 10 predictions for blogs and blog networks over the coming year. It was meant to be humorous, so not many came true.

This season it would be difficult to do the same as most of the buzz has disappeared. Top bloggers have gone pro, and startup networks have become serious and less inclined to gossip — except incomprehensibly on Twitter, where it’s like listening to one side of a telephone conversation spoken in code. So I’m not going to do ten predictions this year.

2007 has been the year of unblogging. Blogging about blogging has hit the deadpool. The tedium just turned us off in the end, as it always does.

That’s good. When the medium becomes the message something is out of kilter. To say that A is B is gobbledigook since, if true, there would be no need for B. Now the message is clearly the message and we can all get back to simple basics, i.e. content, and use weblog software for what it was meant to be, an easy way to publish our thoughts online without giving an interminable running commentary.

Has that taken some steam out of the blogosphere? You bet it has. Google spotted this and is currently downgrading all but the very best examples of the blogging art. Money will be much tighter until the next boom, which may be some years away.

Advertisers too are reining in their drive into blogs, converting big downpayments into PayPerClick models. Who can blame them? Goldrushes never last.

So I’m going to make one prediction for 2008. It will be much harder financially for everyone, and only the best will survive. The credit crunch will squeeze out those who haven’t put something by for the hard times, and leave the dabblers stranded.

It’s going to be a long, hard haul, but hey, that’s where the fun is, isn’t it?

Chins up and mind how you grow.

Trees fall in the forest. People die. Businesses fail. Get over it.

However, the fallout from business failure is occasionally brutal and usually damaging to the participants. Bank accounts lie empty, egos are bruised, anger flies thick and furious.

Take the crash and burn of Blognation — a UK-based blog network that has been praised by a set of luminaries, including Robert Scoble.

Started by Sam Sethi, who also ran the ill-fated TechCrunch UK, Blognation is now the subject of a blogging firestorm. There’s an open letter to Sethi by Oliver Starr on TechCrunch, while the author puts it up on StarrTrek, his personal vehicle. I won’t go into the details, they’re extremely depressing, but read it yourself if you like a good weepie.

All this is a downbeat prologue to a review of a new, very positive book on startups and funding by the man who “invented” the British venture capital and private equity industries, Sir Ronald Cohen.

Cohen is reported to be a close friend of new British Prime Minister, Gordon Brown, and a donor to the Labour party. Despite all that he can claim real and spectacular achievements in his long business career.

Cohen is the founder of a private equity company, Apax Partners, and has written an interesting book covering his business activities and philosophy : The Second Bounce Of The Ball: Turning Risk Into Opportunity. Gems of wisdom from the book include, “Start young, think big and stick with it.” And, “Seek out uncertainties. Risk is where the money is.”

Although Cohen started out as a rather poor immigrant to Britain from Egypt, his education was of the best : a degree at Oxford and an MBA from the Harvard Business School, where he met the people who would be his partners in later life, and the contacts who mattered.

The second bounce means trying to spot what comes next. Using our first example, what comes after blog networks? As a network owner myself, I know the problems inherent in that question. Recently, Google has severely downgraded the PageRanks of blogs and networks in particular. Many highly rated blogs have dropped from PR6 to PR 3, which now seems to be the norm. Syntagma has only just recovered to a 4, while some of our other sites are settling down to 3s and recovering from zero.

It’s not easy to run a business which is in the hands of another company’s self-interest. So Cohen’s suggestion is to stay ahead of the game by working on “the second bounce of the ball”, while never forgetting that risk is where the money is.

Our second bounce? : “a long-term plan to create specialist information products for high-worth niches, published privately or behind subscription walls.”

We’re already looking toward the third bounce.

Juicy Quotes

Risk is an emotive word that masks the value of uncertainty.

Stop worrying about failure and put that energy into winning the race.

Investors back jockeys not horses.

Fulfilment lies in reaching a balance between what you do for yourself and what you do for others.

I’ve read many books on entrepreeurship in recent years. This is undoubtedly one of the best, being both illuminating and readable simultaneously.

Highly recommended for merchant adventurers.

I’m coming late to this meme which peaked yesterday. Basically, it’s another example of the cultural cringe and sense of inferiority still found in folk who make — or try to make — their livings online.

Jeremy Wright takes the prize as the best respondent with his highly-informative Ensight post on how much the unionization of a blog network would cost. #

On digital networks in particular, the problem arose when someone called them an “industry” — a certain J. Wright of Toronto in fact. But given the quality of his post, we’ll forgive him for that.

If blog networks really are an industry then clearly they must comply with industrial standards embedded in law. But not by any stretch of the imagination can they be put alongside General Motors, Rolls Royce or Microsoft. They are a sector at best — a branch of the Content Producers Guild, which is a bunch of disparate individuals in most cases, not public joint-stock companies.

Jeremy’s post, though, covered all the exits. As I’ve written here many times, there just isn’t enough money in online, original content creation to comply with every jurisdiction where you may have bloggers. At peak, Syntagma had writers in nine different countries. I have difficulty keeping up with our own laws, let alone the world’s legislative extravagances. Around 4000 new regulations for business were handed down from Cloud Nine (Parliament and Brussels) last year alone. Most just pile rigidities on top of complexity.

However, there are still some ragged-trousered half-bakes around who consider the Web as a substitute for the old Soviet Union. At Performancing, no less, someone’s even writing about “collectives”. Stick that red flag in the washing machine, you may need it before long.

The internet is about individuality, not collectivization. We have enough of that drab science in the real world, thank you very much.

I’m all for open source and charity. But they should never be forced down people’s throats or the best part of humanity will be choked off at birth.

Sundays are usually “put your hands up time” where I come from. In other words, a time to fess up to your faults. #

So here goes. I have an addiction. A serious addiction. It causes me no end of problems and sweaty-palmed angst. I am addicted to …

Techmeme! #

Like many a tech-oriented internet user, I find Gabe Rivera’s almost-perfect creation irresistible. There are times when it seems to be the centre of the universe, with huge galaxies and bright stars spinning off in vast numbers from this fiery firmament of knowledge and innovation. Heck, Syntagma is quite often in there too.

Okay, I’m exaggerating a bit to get your attention. Because there are also times — increasingly so — when a blanket of gloom settles over me as I trundle through the familiar stories on shiny new applications and hardware which deliver to the user the tiniest smidgeon of improvement over their current expensively-procured setup. And the orgasmic excitement over the tweeniest fall from grace, or the most overblown prediction, has to be experienced to be believed.

I was glad, therefore, to wake up this Sunday morning to a cool blast of common sense by Dave Winer. Spinning off a New York Times article about Silicon Valley, he pens the following :

“The truth is that the people of Silicon Valley toil to find security in money, never getting there, while avoiding the pleasures of life, including the mythological creativity, spinning on a treadmill, doing nothing but striving to make money, but it’s never enough. … You can’t find security through money, because security is impossible. We die. Deal with it.”

The reason that hit home to me is that it’s what I’ve been doing all this year. Pulling back from the mesmeric allure of the “blog network industry” dream which promises that the creation of mediocre content online can produce an eight-figure fortune in a couple of years or so.

I’ve written about my disillusionment on that score many times here, and also on the alternative of simply running a relaxed, quality content business for fun and a decent, regular income. In turn, this creates time to operate in the real world as a hedge play and a grounding exercise.

Either way, Silicon Valley is for obsessives who continue to believe the Faustian deal with venture capital is the path to enduring happiness.

To paraphrase that old IRA man, Gerry Adams : Mephistopheles hasn’t gone away, you know.

We’ve been looking carefully at the Syntagma network over the early summer, thanks to Gerry Reynolds, a business consultant specializing in the retail sector. Like all such exercises, much of what emerged was already known to me from the experiences of the past two years, but two thoughts in particular were illuminating.

Gerry’s first insight, which I was aware of, is that the online content business is a small margin trade — unless you’re prepared to invest heavily ($20m). By that he means that there are few big payouts for individual sales — i.e. of ad space. Big bucks have to be accumulated over time from small sum payments.

Drawing on his retail knowledge, he likened the business to little corner shops, which make margins of around 2 percent. To make that sort of business pay it has to be run almost around the clock. Most small shops are owned by immigrant groups and open between 8am and 10pm. Moreover, they are family run, with the kids roped in for shelf stacking after they’ve returned from school. Teenagers and grandparents also take turns behind the counter.

The owner may also import exotic foods from Asia or elsewhere and wholesale them to other outlets. Other shops may be opened in different parts of town. Everything is optimized to lift that slim margin to an impressive return.

Similarly, a digital (blog) network needs quantity and variety to make the business pay. For example, some of our sites do well on text link ads, selling out in a couple of months. A few are Adsense magnets drawing clicks from heavy, regular traffic. Others attract different types of advertising, while one or two specialize in affiliate sales. Often you simply can’t tell until you try.

The attraction of multi-domain networks is that they can contain a variety of advertising magnets, which allow many fingers in different pies.

All sites need time to mature, of course — around 18 months — before they reach their potential and start contributing to the pot.

Rarely will one site make a living salary for its owner. It does happen, of course, usually for quirky, semi-commercial blogs which catch on for reasons known only to visitors, or sites using below the radar techniques for hoovering up Adsense clicks.

By accumulating sufficient inventory in the right niches, and optimizing it for profitable trading, network owners can make a good living from the business. In some isolated cases, they can even sell off the company for seven or eight figure sums, but that should not be taken as read for the vast majority.

So, that’s one of Gerry’s insights : the need, like corner shops, to work with low margins through quantity, while not compromising on quality. A hard call, and only for the determined. But does anyone think it’s easy winning a gold medal in the Olympic Games?

Another aspect of the business our consultant stared hard at was the use of branding. He looked at our basic brands and assessed their worth.

On his advice we closed down our Allusionz network magazine last month as it was going nowhere. The brand last in, Moneyizor, has already overtaken LifeTimes, but is slightly behind Phi still. It could end up in front of both.

However, one brand stood head and shoulders above the remaining three, and it’s not hard to guess what it is : Syntagma. The whole network should be pulled together more tightly like a drawstring, he suggested, to emphasize the Syntagma brand, while retaining the three subsidiary brands as “sections” of one online publication — with their own portals as now — instead of separate “magazines”.

It makes a lot of sense, and marks a retreat from the long-list method of presenting a network, which we partially moved away from with the network magazine concept. It’s simply the logical next step along the same path.

We’ll be working on this project over the rest of the summer.

There are other profitable elements in this package too, but those are confidential and for my eyes only.

I’ve long been writing here at Syntagma about the “wide” version of blog networks developing into a “deeper” model more in tune with print newspapers and magazines.

This has been the basis of our “network magazine” structure over the past six months. However, I’ve not yet had the time to develop this concept as I originally set out to do. That is still to come.

We now have three broad niche “magazines” with the next stage pulling them together into one online publication, albeit distributed between multi-domains and topic verticals.

I’ve just read Scott Karp over at Publishing 2.0 — writing from the opposite direction — in which he puts the case for print newspapers converting their online presence into multi-blog networks and it certainly rings a bell with me. This convergence is undoubtedly the way forward.

A single “brand” umbrella title, with print credibility, utilizing the flair and flexibility of weblog software by employing a range of contributors, amateur and pro, while maintaining the standards, professionalism and sense of mission of the best newspapers, is clearly the future of news journalism and commentary, especially for local content.

Quote : “What’s becoming clear is that blogs are now the organizing principle for newspapers’ original online content. And these are ‘real’ blogs, i.e. driven by one or two individual bloggers, with (often active) comments, RSS feeds, the whole nine yards.”

In other words, the weblog software platform is capable of far more than we normally expect from “blogging”. It’s capable of a full range of journalistic output, linked through the tools used by the top blog networks and the quality and depth associated with the best print newspapers and magazines.

Maybe there are three tiers of journalists at these blog network “newspapers”:

1. Full-time reporters and editors, who ensure breadth of coverage, quality and standards, and public mission
2. Paid freelancers who write on a regular basis, but not full-time — these can be stay-at-home parents looking for supplemental income, retirees looking for extra income or to keep busy, college students, etc.
3. “Witness” reporters (avoiding “citizen journalist” on purpose), who contribute to the reporting effort when they witness news in some form.

As I wrote here recently, “The medium isn’t the message, the quality and form of the writing, or broadcasting is. Good reportage is just that, wherever it appears. So is commentary. So is any other form of expression. We’ve been confusing the medium with the message for too long — since Marshall McLuhan in fact.

For example, some newspapers incorporate an occasional poetry spot, where decent poets can publish their verses. Does that make the poet a journalist? If writers use blog platforms to publish the kind of article that could easily appear in a broadsheet paper or specialist magazine, does that make them bloggers?”

What is certain is that this convergence is moving fast — look at any of the online newspapers as example. Print titles are crossing over between platforms to give their audience a richer, and more updated, service than ever before.

Will the print format disappear eventually? Only when the online experience matches the depth and utility of a major print publication.

I suspect print will be with us for quite a time yet.