Is There a Blogging for Money Bubble?

Posted on November 4, 2005

The same OJR article we cited for a Nick Denton quote also speculates about a possible second bubble in online media properties.

The past 12 months have been smoking hot for online media mergersand acquisitions (M&A). Why the sudden interest in online properties that largely have the smell of Web 1.0? Perhaps it's the belated ascendancy of online advertising, with study after studyshowing that ad money is now chasing consumers who are turning to the Net over traditional media.
Add to that the desperation of old-line media companies worried that theirold-line businesses are getting stagnant, and the situation equals anincreased interest in highly trafficked content sites, whether they'reblogs, social networks, wireless content or niche journalism. This isn't a full-blown flashback to the late '90s when any e-commerce site could command millions in venture money; it's more of a mini-bubble focused squarely on online media.

About a possible bubble in blogs and social networks investment banker Tolman Geffs was not sure.

Geffs: I can't speculate on that. There's certainly a lot of activity around it, but as always, I don't know if the owners of social networks will make any money, but the guys selling them picks and shovels will. That's what VeriSign did with Moreover. I think another interesting area that will make money is ad networks that are tapping into the blog world because as a large number of viewing minutes move into blogs, advertising would like to follow. There's money to made in providing an efficient and reliable way of doing it. Ad networks will be profitable, both from a business standpoint and from my world, from an M&A perspective.

So companies like Blogads, Google and Chitika will make all the loot? Most blogs are run by individuals who blog for their own personal enjoyment so that makes a blog bubble unlikely. However, there will be a point in time when the interest in blogging and the number of blogs peaks. But as long as people enjoy blogging it won't crash down to near zero after that peak. If lots of people are blogging in the pursuit of money that turns out not to be there then you could see a bubble burst -- but just in these particular blogs. In this way there could be a bubble in the "blogging for money" types of blogs that could peak and then burst when these bloggers' unreasonable expectations are not met. But a total blog bubble is unlikely because blogging is primarily driven by interest and not by money. As we said before blogs don't bubble like stocks and housing.