Next week, the blogosphere will celebrate the eighth birthday of the term "weblog." Jorn Barger, who started an online journal on his Robot Wisdom website, coined the term on December 17, 1997. It was another fifteen months before Peter Merholz made the noun a verb as well by shortening the term to "blog" as in "we blog."
What started as a group of independent-minded mavericks has now evolved into a big-budget business. On October 6, 2005, Jason Calacanis sold his group of niche blogs called Weblogs, Inc. to AOL for a reported $25 million dollars. Calacanis will continue to run the unit for AOL. According to BusinessWeek Online (BWOL), the reason he sold Weblogs was "his frustration has been that he can't expand fast enough to meet advertiser demand without making large investments in technology and staff." AOL's deep pockets will permit that expansion.
Why would AOL lay out that much money for a group of approximately 100 unrelated blogs? "While few blogs generate much revenue, they introduce a new, promising micromedia model. Blogs are cheap, easily updated, and can focus on a niche market with passionate followers--an advertiser's dream." (BWOL)
While most bloggers are not raking in the kind of money that Calacanis did, the New York Times (NYT) reported recently that "(m)any blog writers have signed up for Google's AdSense program, which started in 2003 and pays Web publishers based on how many times advertisements on their sites receive clicks. Google places the ads on participating Web sites using contextual word matching, in an attempt to ensure that the advertisements relate to the content on the page."
There are other business models through which bloggers earn cash. According to the Times, "affiliate networks" permit bloggers to choose the advertisements that run on their blogs. Another model pays the blogger according to the actual sales that result from the ad instead of according to clicks on the ad. In other cases, bloggers are paid for linking to a company's home page (helping the company to move up on search engine results).
All of this is to say that blog advertising is now very big business. Previously closed source (proprietary) companies have begun to recognize the value of advertising revenue. Hence AOL's interest. I reported on October 18 that, as subscribers to AOL's very expensive dial-up service deserted for faster broadband connections, AOL realized it needed to change its strategy. In a creative move, the online giant began making its programming available for free, counting on advertising revenue on the free pages to make up for the lost subscriber income.
Now AOL has torqued off some of its paid subscribers. The week before Thanksgiving, without warning and without asking permission, AOL began to run advertising banners on their PAID subscriber's blogs on AOL Journals. This arrogance and short-sightedness seriously angered a number of consumers who have been very vocal in expressing their dissatisfaction.
AOL's blunder even prompted Jason Calacanis to scold his new partners. In his blog on www.calacanis.com on November 26, Calacanis said: "We'v (sic) got a ways to go before we make this right with the user base . . . I'm in favor of taking the ads down for now, . . . We should also apologize to the members and contact the folks who've left and offer them something to come back."
I found Calacanis' lengthy blog full of insight and wisdom. He suggested that AOL should begin its own series of blogs to communicate with their consumer base. In essence, he is describing a more intimate form of consumer interaction--and, after all, isn't that what blogging is in the first place?
At age eight, blogging isn't even a pre-teen yet. It will be interesting to see if the deals made with corporate America today change the nature and flavor of tomorrow's blogs.