Blogging For Bucks

The Economist has this to say about blogging.

Because blogging is becoming so popular, people are belatedly pondering its economics. Blogging certainly incurs costs, including the expense for web hosts of storing all those journal entries. On the other hand, it also creates small, tight groups of readers that could make ideal target audiences for advertisers. Like search engines, once considered loss leaders, there is therefore an opportunity for "monetising something cool," reckons Hal Varian, an economist at the University of California at Berkeley.

The most obvious way to do this-charging bloggers for the software they need to upload their commentary on to the web-is probably not the answer. Some blogging software indeed comes at a price. UserLand, one of the first vendors of blogging software, charges users for some of its products. But the trend is toward free software. Blogger was totally free until Google took it over, and now it charges only for souped-up versions of its programmes-those that offer spell-checking and greater upload power. Internet service providers and web portals are also likely to start offering free blogging to attract users.

A better way to make money may be to target advertising at those users. This is how search engines became profitable. Firms such as Overture (recently acquired by Yahoo!) and Google allow advertisers to bid to place their links on top of the results pages of web searches, according to the subject matter of the search, and charge them only when a surfer actually clicks on the sponsored links. Blogs, like search results, tend to segment internet users into groups of people with similar interests, so the model should be transferable. This is why Google started putting advertising on some blogs after it bought Blogger, says Jason Shellen, who came with Blogger to Google. As with web searches, these sponsored links are related to the topic of the blog. In some cases, when a surfer clicks on an ad, the blog's author gets a share of the revenues.

We (well, it's just me so far) here at Businesspundit will never stoop to such a low. How could I criticize companies if they were to advertise on this site? Congress would have to pass a law that business bloggers, like auditors, must remain independent from the companies they blog about.

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Seriously, I wish analysts who follow stocks would start a blog about the company they follow. I'd love to read that stuff. But then again no one ever accused me of being normal.