Investing in blogs

Blogs are going mainstream. The days are long gone when they could be dismissed as the preserve of pyjama-clad commentators with something to get off their chest. Some, such as the Huffington Post, have become fully fledged news organisations. Now, similar sites are attracting cash-rich backers.

Talking Points Memo, the US political website founded by a lone blogger during the 2000 US election recount, recently became the latest blog-turned-news website to pocket an investment round. The deal was small, rumoured at $500,000-$1m, but it came with a big name – Marc Andreessen, founder of the Netscape web browser. In May, he and a handful of other investors put $5m into The Business Insider, the website founded by Henry Blodget, the former internet stock analyst turned blogger. Not bad given that BusinessWeek is on sale for $1.

TBI charges up to $30 per 1,000 impressions for premium advertising space – about what a big newspaper charges. Not all of its ads will sell at premium rates but TBI’s ability to demand such sums shows web upstarts are giving traditional outlets a run for their money.

There are obstacles to the blogs’ advance. As with social networks, many big brands shy away from blogs because their content can be unpredictable, to an extent that makes advertisers nervous. Blogs are also less frequented than traditional outlets. TPM may be one of the most popular political blogs but it attracts about 1 per cent of the monthly unique visitors of The New York Times’ website or 8 per cent of The Guardian’s, according to Comscore.

The irony is that while blogs such as TPM and the Huffington Post have been winning awards and hiring reporting staff, much of their content still consists of riffs on mainstream news stories published by desperate old media companies.

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