It’s obvious that blogs have secured a substantial position in the content space. In many instances, blogs are taking readers away from traditional content sources, whether its TechCrunch pulling readers that might have gone to CNET, or any number of political blogs pulling readers from the traditional newsweeklies.
But, even as blogs assume dominant market positions and mindspace, few of them are profitable enough to enable their authors to blog full-time. PPC advertising with ad networks like Google Adsense might generate a few hundred dollars a month for a blog with strong readership, but that’s about it. At the same time, few blogs can justify the expense of hiring a full-time ad sales executive.
Federated Media Publishing was launched in 2006 by John Battelle to address this issue. FM Publishing has assembled a network of blogs for which they sell advertising. During their first year, 2006, Federated Media had revenues of $4.5 million; for 2007, they are predicting revenues of $30M with several million in net income. Blogs in the FM Publishing network include tech blogs such as BoingBoing and business blogs like Tom Evslin's Fractals of Change and Fred Wilson's A VC.
Federated Media’s approach is not the first effort in this area. Other blog networks, such as Nick Denton’s Gawker Media or Jason Calacanis’ Weblogs, Inc., acquired last year by AOL, provide similar advertising leverage, but use a different model. The Weblogs model built up a set of more than 90 blogs, then paid authors to write for them (typically $300-1,000 per month), with the revenues all going to Weblogs. Gawker employs a similar model for the consumer space, led by titles such as Gizmodo and Beltway gossip blog Wonkette.
Battelle, who authors his own SearchBlog, was an early blogging success story. With Federated Media Publishing, he has successfully bridged the Web 2.0 world with traditional media. While Web 2.0 is all about self-service, widgets and plugins, it’s clear that traditional sales can easily outperform ad networks, provided you have enough ad inventory to sell. The biggest challenge facing FM Publishing will be whether there are enough properties that remain in the midrange – i.e. large enough to generate substantial advertising revenues, but not large enough to make it worth hiring your own sales force.
Through this aggregated network of blogs, Federated Media Publishing is delivering large publisher results while allowing independent bloggers to remain independent.