The Blog Economy

I believe that when viewed through the rear view mirror, 2008 will turn out to be one of the most significant years in blog history. It will be a key inflection point when the blog economy - that sum of value created around blogs and bloggers - moved to establish its true independence.

What is the blog economy?

Often there is an artificial divide between the non-commercial and commercial side of blogging. We see stories about those making money off of blogging, but this seems to be a universe only for stars. But I view the blog economy as a much larger, and more complex, ecosystem that includes both financial and non-financial aspects. While it includes large corporations who are using blogs as part of their marketing and outreach strategies, from GM to Boeing to Intel, it also includes that value that blogs are increasingly bringing these organizations *internally* -- as blogging is becoming a way that organizations are communicating within themselves, and to their best customers.

Blogs aren't just being used by large organizations of course. Millions of people are using blogs to augment ... well, whatever it is that they do. From pundit blogs that we know so well in the political and tech space, to the flood of food and entertainment blogs, to expert blogs written by designers, marketers, lawyers, scientists, economists, and the like to the SMB blogs written by boutique wineries, photographers, craftsmen of all kinds, and businesses in countless industries. Some of these blogs are used simply to get attention to a small business of professional service. Some are used to directly drive ecommerce, and everything in between.

The biggest story, however, may be how blogs continue to transform media.

From experiment to strategy

Blogs became infamous for being the unbridled alternative to MSM, and we all had a lot of fun debating whether this ease of publishing is ultimately to the good or the bad. But it strikes me that this vector of discussion is becoming outmoded - much as the false "bricks vs. clicks" dichotomy of the dot com era obsessed us for too long. Of course it's both, not an either or. Large media have in great measure embraced blogging, and indeed bloggers. What started out as experiments in the past 5 years are evolving into outright strategies as media companies realize that conversations happen on blogs and they better participate. This not only takes the form of links back and forth, but of publishers getting into blogging themselves - and in some cases acquiring the blogs outright. Look at USA Today, Washington Post, Time, Conde Nast, Hearst, NBC, ABC, CBS, and on, and on, and your see media brands building communities - and traffic - through non-traditional means, with blogs, forums, and other forms of social media. A key driver here: the insatiable demand of publishers for more inventory. When it comes to blogs, to steal a phrase from that thief Willie Sutton, blogs are increasingly where the readers are. I believe the significantly lower cost of acquiring traffic via social media will be essential to making the online arms of most media companies profitable.

From hobby to career

But it is the independent bloggers that deserve the highest praise -- the folks that are on the frontier, pushing the medium as they invent new businesses and reinvent new media. Boing Boing, Gothamist, TalkingPointMemo, Huffington Post, Serious Eats, ReadWriteWeb, Simply Recipes, Cute Overload, Celebrity Baby Blog, and many, many, many others who have turned what may have started as a hobby into a career. Success has come quick for some, but for most it has been the product of years of labor, sometimes only for love, not money, with that indispensable ingredient for entrepreneurial success: perseverance. It doesn't hurt to have a little je ne sais quoi to help one blog stand out among millions, but inevitably you'll find plenty of blood, toil, tears, and sweat behind each success.

But many of these folks are exhausted. Absolutely exhausted. Blogging, done right, is work. And there is often a phase in which the blogger has achieved just enough success to be independent, but not enough to be flush. They can pay their bills but they also wear many hats -- and can't yet afford to build a team to wear some of those hats for them. Some have managed to pass the exhaustion phase - they've been able to raise money or generate enough revenue to hire a team - but others are realizing that a profession brings new demands to their hobby.

This is when the concerns of having a site that works, that scales, that's beautiful, that engages the community, that facilitates a greater level of participation, that is cutting edge... become critical. Some have argued that the gap between the small and the successful is just too large for most, and others depend on venture capital to close this gap. With no offense intended to our VC friends, selling part of your blog to investors shouldn't be the only way to make it sustainable. We think we can help emerging bloggers: we can be their team.

This is why we at Six Apart, always in service to bloggers from our very creation, see that while our mission hasn't changed, how we deliver on that mission is expanding. We started Six Apart Services, and acquired the fantastic company formerly known as Apperceptive, because bloggers of all types are asking for more on top of the tool, the service, the platform. From large media companies to aspiring independents, they want help building, help designing, help running, and help pushing the limits of their site. They also want help making money.

Yet another ad network?

We are invested in the success of the bloggers and the companies we serve - whether they are hobbyists, pundits, passionistas, amateurs, prosumers, professionals, or experts - and increasingly this means helping them make a living. The good news is that Internet advertising continues to grow dramatically, and blog advertising spending is growing at a rapid clip too, creating huge opportunities for emerging bloggers.

It is certainly not an underreported story that a wave of blog ad "networks" has emerged to take advantage of this opportunity. While this often elicits eye-rolls from those pundits whose favorite headline starts with "yet another..." there are aspects to this that are underappreciated. First, it takes a village: an energetic push from a large number of players, many venture backed, evangelizing, cajoling, and selling Madison Avenue on how to makes an effective entrance into social media is vital for the whole enterprise to come of age. Second, this discovery process will drive innovation.

We launched Six Apart Media not as YABAN (we ban the word "network" here, lest we elicit images of pork bellies, and I am in trouble already for using it here!), but because we think there is a better way to serve bloggers and marketers alike. Too much advertising is simply "targeted" IAB ads, shingled on the side of a blog. Too much is low-CPM, low-value direct response or backfill ads that don't deliver as much as they could for the publisher. We think there is a better way.

Fear v. greed cycle

And that better way inevitably includes brands. Brand advertising against branded media has been well understood for a long time, but brands on online communities & UGC is something very new. And yet brand advertising makes a huge portion of overall media spend. We've been selling branded advertising against a large set of bloggers and we believe there is new territory here that will fundamentally change how the blog economy works. The good news is that, in our assessment, we are reaching a new point in the cycle.

We all know about the fear/greed cycles of markets. The more we talk to marketers the more we see that the concern about whether they should even touch social media is being supplanted by another concern: they may be left out. As now in 2008, for the first time, more Internet users read blogs than not, marketers realize that blogs are where many opinions are created, shaped, and influenced. It's shifted from a "whether" question to a "how" question. We think that the "how" is best answered with intelligent, high-engagement, custom content campaigns that fully leverage the platform - and we feel this platform advantage makes Six Apart Media unique.

Next phase in blogging: social publishing

Which leads us back to where we started: the platform. This new phase isn't about "business blogging." It about how this complex ecosystem is operating to move the whole medium forward. Traditional blogging, with easy publishing of reverse chronological posts and comment threads, gave birth to this blog economy, and the economy in turn is pushing forward a new, modern form of blogging. This modern blogging, infused and influenced by the innovations of social networking over the past years, is in many cases moving past single author/single blog sites. Sites are becoming more complex, with multiple blogs and multiple authors - sometimes with posts not in reverse chron! Readers, who became commenters in traditional blogging, are becoming members. Vital contributors -- who have profiles, comment histories, guest posts, etc. - develop identities on the sites they frequent. The cutting edge sites, like many of the ones I mentioned above, are forging a new form of social publishing. Social networking for socializing is powerful, but it isn't the end of the story. Community around content is a growing form of social networking.

This is what has driven the success of our Movable Type Community Solution, which launched last year, and has helped dramatically improve how sites interact with and engage their readers. We think it's the cutting edge of blogging - and there is a lot more to come. And, of course, the services and innovations that emerge, spawned by the growth in the blog economy, serve everyone blogging and reading blogs, not just those trying to make money.

What's so great about 2008?

While there are many early adopters, and there will be laggards too, it feels like 2008 is an inflection point year. The year in which professional media embraces blogging as a strategy, rather than an experiment. The year in which bloggers turning their hobbies into careers is a common tale, not an outlier. The year in which for the first time more Internet users are reading blogs than not. The year in which brands let their desire to participate in social media overtake their trepidations. The year in which a modern form of blogging hit center stage, ushering in a new form of social publishing.

While there is nervousness about the global economy - a tide that in the short term may lower some boats - the blog economy has never been better.