Blogging: The Winners, the Losers

Like any new communications medium, blogging has unleashed a flurry of analysis on what it means for other media sources, and some quieter questions about what it means for the livelihoods of the bloggers themselves. In short, the question is: Does it pay to blog, and if not will anyone make money from the blogging trend?

Unfortunately enough for everyone -- whether they're me or even successful -- the answers are 'No' and 'Only if they're lucky and/or spectacularly unscrupulous'. I'm not just going by the data we have (which are pretty limited, since there are only a few 'professional' bloggers out there -- one of whom might be too busy dealing with his foreclosure woes to see to it that "After start-up costs for even snazzy sites, most income is profit.")

There are a few blog publishers out there, including Nick Denton and Jason Calcanis, but they've attracted plenty of attention without revealing much about their profits (which, unfortunately enough, is a sign that these profits are either nonexistent or so spectacular the blogging impresarios are deathly afraid of competition -- so much for certainty). And no boom would be complete without the pick-and-shovel argument, which loses some steam when you see the reaction from customers if you try to charge for picks or shovels.

Sometimes, it's slightly puzzling that a tool as revolutionary as the blog would have spawned hundreds of business -- the best of which brag about being breakeven operation -- without anyone pulling ahead and creating a valuable enterprise based on it. The missing piece of the puzzle: Blogs, like every business, require capital -- but they require it almost exclusively in the form of time. Thanks to how the Internet has evolved, companies simply can't charge people for the time they spend online; the business model of the Internet has made effectively charging for blogs basically impossible.

Alas, the 'time-capital' factor leads to another unpleasant reality: So many independent operators have poured their time into creating weblogs that the price of advertising on one is and will remain under constant pressure. More and more bloggers trying to recoup their investment with a small stream of ad revenue will make blogs one of the cheapest ways to get a product's name out there. Meanwhile, as they further fragment, and become even more specialized, successful blogs will serve such small markets they won't be able to provide a decent return on investment to even the best, most devoted blogger.

It's a fun hobby, and a few people will probably make some money from it before the trend is over, but blogs don't make sense as a business proposition. Media coverage, whether fawning (Key term: "A blog, from the term "Web-log," is...") to the alarmist ("So-called "Bloggers," a horde of unaccredited, often biased, and probably syphilitic psuedojournalists all of whom are clearly being paid by whoever it is that I disagree with at the moment...") hasn't turned to the economic impact of blogging, so view this as a preemptive rebuttal: Blogs will provide a lot of benefit to readers, they'll do lots for the egos of (some) writers, but their returns will be absolutely miniscule.