AOL Buys Weblogs Inc. — $25 Million

[Cutter]

Heres what I posted about it on my own blog:

Blog publisher Weblogs Inc. was purchased by AOL for $25 million.

This is a company I have been following closely ever since I learned that they cleared close to $1 million a year from Adsense. The way the company works is they hire bloggers who can can then post on multiple blogs accross the network.

The company was founded sometime around 2003. The details I’ve gathered show they pay their bloggers roughly $1 million a year, make $1 million from Adsense, and make another $1 million from selling their own ad space. Some of their most notable blogs are autoblog, engadget, and luxist. They run a total of 80 blogs.

One of the advantages the Weblogs Inc. has by running a huge network of sites — rather than each one seperately of each other — is that launching a new blog is easy. Every blog is linked to on each and every page of every blog. This is a technique that lands some search engine optimizer’s websites in hot water but it appears to only have had a positive effect for Weblogs.

This is a great payday for two guys who started their own blog network a couple years ago. Its also proof that paying for content is worth it — even if it cuts into your immediate profit margins.

[piniyini]

holy f%FS!

[Cutter]

See guys, take your webpublishing seriously -- a lot of big media companies are shopping for websites ;)

[deronsizemore]

The more I find out about big payouts like that makes me want to get real serious about it...now if I can just make my wife see its worth the effort. She thinks I'm just wasting time every night on my computer.

[Emancipator]

just keep in mind this is not like shooting fish in a barrel. The likelyhood of yahoo buying your site.. not likely. These guys lucked out by having a great site which fit the immediate need.

[John]

I love hearing things like this, chris's success story thread, and even about the milliondollarhomepage, it gives me some confidence in what I'm doing, and reassures me there is big money in web development.

[Emancipator]

definitely john... i always like to hear about people who do well

[Cutter]

I believe luck plays a role -- but only a role. IF you've already ran into this forum and know how to make websites -- thats luck. Your site might not sell for a million but that doesn't mean you can't make a damn good living.

Take it seriously, and work smart.

[Chris]

just keep in mind this is not like shooting fish in a barrel. The likelyhood of yahoo buying your site.. not likely. These guys lucked out by having a great site which fit the immediate need.
Nah, they lucked out because they had alot of media attention which added legitimacy and also drew the eyes of those with the big pockets.

[Emancipator]

exactly.. they lucked out. Good Factors and in the right market at the right time.

[Cutter]

And do you think that having lots of media attention was the result of lucking out? Its because their owners understand the importance of public relations.

[paul]

Old quote "The harder I work the luckier I get." :) Seriously, if they hadn't built the site they couldn't have gotten lucky.

[James]

I wouldn't have sold it outright. I'd have maintained that I should get stock, stay in the company earning a wage for doing nothing, etc. or something along those lines.

[r2d2]

Old quote "The harder I work the luckier I get." :) Seriously, if they hadn't built the site they couldn't have gotten lucky.

I'm with Paul on the luck thing.

Fair play to them for building something that someone else was willing to pay a lot for.

I would have liked to have kept a share too - maybe AOL said all or nothing?

[chromate]

Wow. $25m for a site only making $1m profit/year? Nice payout for those two guys! :)

[paul]

Thats why going public in the stock market is so rewarding. A price/earnings ratio of 25 for a hot technology company with good growth prospects is cheap. I don't track stocks but as I recall, companies with stock selling at PE's over 50 are not unusual. Anyone know what the PE of Google stock was at the initial price?

[Chris]

And do you think that having lots of media attention was the result of lucking out? Its because their owners understand the importance of public relations.
Nah, its because they're nerds. They get attention from the nerds, and the nerds control the Internet.

[James]

I can honestly not find a flaw in Chris' logic. We should all be so lucky as to be as big of nerds.

[Emancipator]

lol i know alot of nerds who make two things on the internet Jack and Squat. They lucked out by being in the right place with the right item at the right time. Anyone could have done what they did.. they just did it right

[Cutter]

I don't know, I used to spend a lot of time of Slashdot and it seemed to me like half of the people on there were unemployeed, and very nerdy, programmers who couldn't be bothered to earn a dime ;)

[Chris]

I just mean its the whole Silicone Valley thing. I've seen sites that have traffic that many people here beat get mentioned as some big huge popular thing because they're based in San Francisco.

Most bloggers are nerds and so they keep up on nerdy happenings, thus you get overwhelming blog exposure on something nerdy like making $2k a day with Adsense.. Most technology reporters are also nerds, so they learn about things in their nerdy life and report on them. Reporting on blogs as the soup du jour is also popular right ow.

The fact is that for any given news story there might be 100 websites that are worth mentioning, and the one that gets mentioned is usually the one based out of San Francisco. Its like there is a little club.

Now Weblogs is in New York, so this doesn't explicitly apply, but the concept is the same.

Its streetcred (nerdcred if you will) and awareness within the Internet/nerd community that got them to where they are.

[Cutter]

This is true with nearly every industry -- knowing people pays off. This is part of the reason why I spend so much time here and a bunch of other forums.

[moonshield]

I can't make my mind up on if this is a good purchase for AOL or not. The guys that own this site made off rather well though.

[LuckyShima]

From the info I have it looks like a very stupid purchase. I cannot understand what this has to do with AOL's business model. $25mil is not a lot for AOL though, but the value will decrease if the operation becomes corporatised and there has to be 3 board meetings and a teleconferencing hook-up before they hire a new blogger rather than how weblogs most likely grew from a passion without concern about time or space.

Maybe it means AOL is 'giving up', like when George in Seinfeld goes out in sweat pants and Jerry tells him that going out in sweat pants is a sign he has 'given up' ;)

[ozgression]

I think it's a good purchase for AOL since they recently said they are getting into content. Off to the perfect start...

To me, this is no different to when the New York Times bought About.

[Chris]

AOL was supposed to be getting out of content though. The reason why their profits plummeted so much is that they had such high overhead providing all that custom content to their members who were switching to ISPs that didn't provide content like NetZero.

[LuckyShima]

To me, this is no different to when the New York Times bought About.
This is my point. AOL is behaving in the same way as a print newspaper desperate to get a web presence. To me, AOL is signalling a backward step.

This is not 'content' like Yahoo content. As far as I can understand, this is just a conglomoration of blogs amongst a tidal wave of blogs gaining greater momentum every day. I read recently that AOL was moving towards delivering content but I thought this meant sophisticated content like the video feeds of the Live 8 Concerts.

As far as I can tell, weblogs relies on google rankings for hits and therefore income. As someone pointed out, there seems to be heavy cross-linking between these blogs which can be penalised at any time.

AOL has bought a product which relies on google rankings and google ads (although they can substitute other ad sources). To me that seems to be a backward step. That is what we do here. Maybe AOL should join our forum and get some tips.

Maybe I don't understand AOL's business model very well as they seem to have disappeared from Australia since dial-up Internet access went out of fashion. Or maybe I don't understand the weblogs business model.

[Chris]

I think what AOL is doing is splitting their assets up. They're trying to become a public portal with public content (like yahoo) and then they have their Netscape unit to sell budget ISP service.

In anycase... I think we can all agree that this was a great deal for the owners of Weblogs. 25x yearly income is outstanding.

I wonder though, if a network of popular forums could bring in that much? Personally I find forums to be far more sticky than blogs, thus less likely to fail or lose popularity eventually.

I'm on my way to those income levels and I'd definitely jump at the chance of a 25m buyout when I get there.

[Mike Hunt]

Yeah, there's a huge "nerd-net." Something gets mentioned in somebody's blog (JWZ, Wheaton, Battelle, Zawodny, etc.) then it gets mentioned on Boingboing, then gets mentioned on Slashdot, then on...

A lot of these people at news sites aren't "nerds" - their technical know-how is really basic.

[Snowballer]

i've been following that network for a while now, amazing how you can go from zero to hero on the net in a matter of 12-24 months!

[Cutter]

Things move fast; the founders of Google went from college students to each being worth $11 billion within about 10 years.

[Snowballer]

I think a key point was raised by Chris, they really got great exposure with him doing all those speeches at 'geek' events. It really gets the word out, and more importantly gets ideas buzzing in investors minds...