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July 31, 2007

New Study: Top 50k blogs had $500 million in 2006 Revenue

Michael Arrington

66 comments »

A new study being published by the University of Texas and Chitika says that the top 50,000 blogs may have generated around $500 million in aggregate 2006 revenue. The data behind the study is rather thin - They are looking at the Chitika blog advertising network, which includes 12,000 blogs, and estimating that most blogs would have three distinct revenue sources. Blog rankings are determined by Technorati rank.

The study results are embedded below. An interesting conclusion is that blog revenue may defy the “80/20 rule”, with even more revenue going to top blogs than usual, with 20% of total revenue going to the top 1% of blogs. “Upon closer observation, it was found that model tends to overestimate the revenue at less popular blogs, but underestimates it at more popular ones” the study says. And:

Summary of Findings: Ad revenue in a blog is more sensitive to the rank of the blog than what one would expect in a typical Zipf Law 80/20 curve situation. One reason for this may be the social value of advertising in a blog. If online advertising is like advertising in a mall, advertising in the blogosphere is like advertising in a country club.

  • The top 1% accounted for approximately 20% of the total revenue.
  • The top 5% accounted for approximately 50% of the total revenue.
  • The top 10% accounted for approximately 80% of the total revenue.
  • The top 15% accounted for approximately 90% of the total revenue.

Again, the data behind the study is very thin, and using Technorati to determine the top 50,000 blogs may not be a perfect indicator either.

  • Sphere It

This entry was posted on Tuesday, July 31st, 2007 at 4:48 pm and is filed under Company & Product Profiles, Web 2.0 News & Ideas. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Comments

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  1. Jono

    July 31st, 2007 at 4:54 pm

    Interesting, but what criteria qualifies a “blog” to be a blog? Aren’t most blogs just media news sites these days, simply formatted in a visually different structure? After all, TC is a corporation with employees and a CEO. Is TC a blog?

  2. sam

    July 31st, 2007 at 5:07 pm

    I think the headline says $500M in revenue.

  3. mainstreetreporter

    July 31st, 2007 at 5:19 pm

    Yep, 500 big ones, not fifty. Now we’re talkin

  4. Casey Kazan

    July 31st, 2007 at 5:21 pm

    Pretty sloppy copy editing: headline should read $500 million NOT $50,000 if the actual report document shown is accurate.

    Big and very positive and exciting difference!

  5. Tony

    July 31st, 2007 at 5:28 pm

    Man… how do I get my blog in on the action?

    I think Jono makes a good point though, in this study, would TC be counted as a blog?

  6. Keith Larrimore

    July 31st, 2007 at 5:34 pm

    Its interesting to see how the income is spread less evenly than in American society, which we are told is so wrong. I think it just goes to show how much more productive some people are.

  7. Yasser

    July 31st, 2007 at 5:38 pm

    Well according to Technorati, TC is a blog. It’s just a corporate blog. But it would be nice to see a study of the revenues of individuals who have blogs, not corporations.

  8. Nerd Forum

    July 31st, 2007 at 5:46 pm

    I thought they would make more money than that. Still, you can expect to see huge growth in the near future. I wouldn’t be at all surprised if that $50 million mark doubles by 2010. There are a lot of nerds out there reading blogs ;)

    -Chris

  9. Blog Opinion

    July 31st, 2007 at 6:45 pm

    Blogs are becoming a good media for advertise product and service creating more business.

  10. foe

    July 31st, 2007 at 6:49 pm

    “The top 1% accounted for approximately 20% of the total revenue.”

    The top 1% pulled in an average of $200K a year

    Big fucking whoopdidoo!!!

  11. worth

    July 31st, 2007 at 7:07 pm

    By the way, this was a University of Texas at Dallas study (which is actually in Richardson, not Dallas), not to be confused with The University of Texas. Thank you.

  12. PookieBadMuffin

    July 31st, 2007 at 7:12 pm

    Hell yes! Flashpaper!

  13. chinaboy

    July 31st, 2007 at 7:31 pm

    that means $1000 per blog in 2006?

    I think a TOP 50k blog should made more than $1000 a year.

  14. David Mackey

    July 31st, 2007 at 7:31 pm

    $500 million, wow. Can I be a blogger? Michael - I’m guess TechCrunch falls in that top 50,000?

  15. foe

    July 31st, 2007 at 7:42 pm

    Chitika??? wtf

    Chitika (pronounced CHIH-tih-ka), or better yet Chitikaka (pronounced SHITTY-ka-ka)

    Arrington, you’re at the pinnacle of the blogosphere shitheap, you can afford a proofreader.

  16. David Scott Lewis

    July 31st, 2007 at 7:43 pm

    Michael, please provide a link to the study.

    BTW, the results do not surprise me at all — and the country club analogy seems about right.

    Is TC a blog? Yes, even though you’ve built a company around it. Is a MSM RSS feed and blog really a blog? Not really since their dynamics are very different.

    You’ve done what many bloggers can only dream of doing. (Think of all the ProBlogger subscribers.) But a blog from BusinessWeek competes at a different level since they have a built-in reader base that’s tough for others to match.

    Web 2.0 was a good opportunity for you. Good for you. But even in areas like enterprise software, there are way too many “real” publications like Baseline, Computerworld, InformationWeek, you name it. Tough to get traction in an already established area. The Enterprise Irregulars have traction, but most were former (or still are) industry analysts, often at the VP or equivalent level. I’d argue that they have greater influence than TechCrunch since your universe is limited to the Web 2.0 crowd and people looking for new toys (which is one reason I wouldn’t try to copy VentureWire in THIS blog, but create another blog to do so; a lot of your readers are looking for toys, not IPO info … and for those wanting IPO info, they could subscribe to your VentureWire clone, a free blog versus the very expensive VentureWire Professional subscription).

    But you have a greater impact within your segment of the universe, even though Web 2.0 is nothing compared to Oracle and SAP, i.e., compared to “real” software. Compare revs of all the Web 2.0 companies to Oracle and SAP and you’ll see what I mean. Toss out Google (if Google is, indeed, considered a Web 2.0 company) and the combined revs for Web 2.0 companies is pitiful. After all Yahoo, eBay and Amazon are Web 1.0 companies, not Web 2.0 companies even though they’re adapting to Web 2.0 in a broad sense. And I suspect that you don’t have a lot of influence on Google, Yahoo, Amazon, but a tremendous amount of influence on Web 2.0 pure plays: Between you and Read/Write Web, you can effective make or break a Web 2.0 start up.

    Yes, YouTube and MySpace were bought for an outrageous amount of money (and for YouTube, it was primarily for branding), and Facebook is looking at a multibillion dollar market cap. But what about revenues? Oh, and let’s not forget one other word: Profit.

    No profit (or a loss) + limited revenues + high market caps = Bubble 2.0. At some point, the world will get wise again and there will DEFINITELY be a crash.

    BTW, good luck on doing a VentureWire clone. I get The Deal from the New York Times since I won’t spend the $$$ on VentureWire Professional. But if somebody does this, i.e., creates a VentureWire clone, I suspect that they’d have a winner. And TC would have enough credibility to make this fly. I also wonder if Dow Jones would really be willing to offer it for free; they’d either have to kill it, up the ante and offer more premium content for the same price; focus on different segments (like they have with life sciences coverage).

  17. foe

    July 31st, 2007 at 7:47 pm

    @chinaboy I think a couple of beads have fallen off your chinese made abacus. Go back and check your math.

  18. David Scott Lewis

    July 31st, 2007 at 8:07 pm

    Sorry, I now see the report. It didn’t download when I first read this post. No link is necessary.

  19. Andy Swan

    July 31st, 2007 at 8:10 pm

    Foe,

    Chinaboy’s math is correct when based on the TechCrunch headline, which is missing a minor “0″.

    With the correct $500 million number, it works out to $10,000/year for these top 50k blogs.

  20. Allen Stern

    July 31st, 2007 at 8:17 pm

    One important thing to remember is the part in the blockquote. The top 1% accounted for 20% of the revenue and the top 15% of the study accounted for 90% of the revenue.

    Just like Google adsense, the top tier makes most, while the bottom 85% made only 10%.

  21. Pizzed

    July 31st, 2007 at 8:17 pm

    Wow…Mike I love your blog, but dude these aren’t numbers that you wanna share…(Not really impressive)

  22. Renan

    July 31st, 2007 at 8:30 pm

    http://teobaldohp.blogspot.com

  23. Rex Hammock

    July 31st, 2007 at 8:35 pm

    The first thing about this “research” that flunks the smell test is this: The 80/20 “rule” is the Pareto Principle, not Zipf’s Law. Secondly, blogs — and specifically the ability to place Google adsense ads on them — sets up what is perhaps the purest “long tail” market that can possibly exist. The notion that the market stops at 50,000 is a notion that is based on physical goods, not the endless shelves of advertising inventory found on the blogosphere. The economics of blog advertising is better understood by examining the aggreagate, rather than the blockbuster. Do the top 5,000,000 blogs generate more revenue — in the aggregate than the top 500? Or are blogs just another “hit-driven” market.

  24. Ted Murphy

    July 31st, 2007 at 8:49 pm

    Mike, how can you even publish something like this? A study that approximates income based on advertising revenue alone from a sample of only 12,000 bloggers using Chitika? Don’t get me wrong, I like the service they provide but the data set is minimal and they are only looking at advertising.

    A smaller blogger can dramatically increase revenue through creating sponsored content. We’ve got over 40,000 bloggers now and I would bet money that many of them make more money than bloggers with 2 to 3x the technorati rank.

    This study was a nice shot in the dark, but that’s all it is.

  25. Aaronontheweb (AjaxNinja)

    July 31st, 2007 at 8:49 pm

    So what percentage of that revenue is going to the blog monetizing genius of Darren Rowse? ;) That man is my idol.

  26. chinaboy

    July 31st, 2007 at 9:04 pm

    @ foe

    sorry, I did not see the pdf.

    But TC’s math mistake made me wrong.

    $10,000 a year make sense now.

  27. Steve Spalding

    July 31st, 2007 at 9:13 pm

    This is a good point. Considering the huge range of blog monetization schemes available to the average blogger (everything ranging from direct sponsorship right on through to Kontera) it seems ludicrous to believe that measuring revenue in this fashion has any meaning whatsoever.

    What about those bloggers (and I can name quite a few) who generate the majority of their revenue from systems like *gasp* PayPerPost or ReviewMe. Based on the returns one could have from successfully using these services I would say that figure could increase by 10 or 20% without much trouble.

    Next, the idea that only the top 50,000 blogs control the majority of this revenue also fails for reasons that Rex pointed out. In aggregate, the blogosphere generates income in so many different ways and from so many different sources, many of which have nothing at all to do with the number of linkbacks (Technorati’s measure of authority) that a blog receives, that relying on this data completely ignores huge amounts of available advertising inventory.

    Lets not forget that Chitika works best on blogs that primarily deal in tangibles. Gadget blogs, for example, will work well in this market compared to something like the Huffington Post.

    As a first effort, this study is amusing. As statistical truth (whatever that is), I imagine that it is pretty far off.

  28. foe

    July 31st, 2007 at 9:14 pm

    @ Andy Swan - go back to 7th grade math

    1% of 50k is 500 —- are you following this

    20% of $500M is $100M —– I haven’t lost you yet

    $100M divided amongs the top 500 is $200,000 per year

    The $500M is not equally distributed.

  29. David Scott Lewis

    July 31st, 2007 at 9:18 pm

    If 85% of the top 50,000 blogs make a total of $50,000,000 (i.e., 10% of $500 million), then that’s only $1,176 per blog (i.e., among the 85%). Of course, this skews heavily in favor of the most popular among the 42,500 (i.e., the lagging 85% of the top 50,000). But this is also the top .1% of blogs, right, i.e., if there are truly 50 million or so blogs. Not encouraging data, at least not encouraging if someone hopes to make $$$ through their blog.

    Okay, the data isn’t perfect — but the message is clear: Most bloggers shouldn’t expect to make more than jiaozi money (at best).

  30. Wake Up Early

    July 31st, 2007 at 9:44 pm

    I think this has more to do with Chitika selfadvertising than with reality

  31. David Scott Lewis

    July 31st, 2007 at 9:52 pm

    Monetizing Blogs: Other Options

    Yes, I realize that blogs can be monetized in other ways (e.g., sponsorships — isn’t this how Tony @ AlwaysOn makes money from his endeavor, besides using it as a publishing mechanism to support his money making conferences) and that blogs can sometimes generate good sales leads. I’m thinking of China Law Blog as an example of an excellent blog that has generated good leads for their boutique law firm. But the numbers are still challenging anyway you slice or dice it.

  32. Clyde Smith

    July 31st, 2007 at 9:59 pm

    They estimated 3x Chitika income?

    Their methodology is a joke.

  33. David Scott Lewis

    July 31st, 2007 at 10:13 pm

    What’s clear, I guess, is that if you have a winning blog, i.e., one of the top blogs, you’ll make good money.

    The problem: Most bloggers don’t have a prayer at creating a top blog.

    They want the riches, but will likely get scraps at best.

    Hence, blogging should be done for reasons other than making $$$ — since few blogs (relatively speaking) will make the top grade.

    If ProBlogger is one of your must read blogs, then you should stick with your day job and build a substantial readership before taking a foolish leap of faith and becoming a full-time blogger under the assumption (a probably false assumption) that you’re blog will be successful.

    With all the “attention” stuff that’s going around, I suspect that Techmeme will remain a great source for a lead story, but that all the other “me, too” stories linked on Techmeme will get fewer and fewer readers. Let’s face it, people just don’t have time.

    What I’d like to see on Techmeme is a lead story and then tagged stories that are deemed as excellent companion posts. This makes life a lot easier for Techmeme readers: I can click on the main story and then another story or two that has been rated as an excellent companion post. But I don’t have to sift through another half-dozen or more posts to find which other posts I may want to read.

    Techmeme SHOULD be able to do this since it doesn’t cover too many stories. In other words, they should be able to add editorial staff. (Hey, outsource if necessary.) This means that link blogs won’t get a lot of click throughs, but that new(er) blogs might have a shot at rising to the top because of excellent analysis. TechCrunch = news blog; Read/Write Web = analysis blog (although I still view R/WW as more news than analysis). But you get the picture. A news blog breaks a story; a couple of top analysis blogs chime in to add to the conversation. Other blog posts could be linked, but they wouldn’t be noted as especially useful.

    Sorry, I’m on a rant today. I guess I’m feeling a bit trapped in China since I’m not currently at the AO Stanford Summit.

  34. Wes

    July 31st, 2007 at 10:15 pm

    Not very surprising results even though I think they are far from accurate because there are now more ways of making money from a blog and even more advertising networks. Good advert for Chitika though.

  35. Dominic

    July 31st, 2007 at 10:39 pm

    If one were to look at the ad rates for TC, I’d TC is pulling in over $1.2 million annually in ad/sponsorhips alone. Do the math.

  36. Dominic

    July 31st, 2007 at 10:40 pm

    If one were to look at the ad rates for TC, I’d wager TC is pulling in over $1.2 million annually in ad/sponsorhips alone. Do the math. Not bad for content that is becoming more tabloid than anything.

  37. onecore

    July 31st, 2007 at 11:44 pm

    The methodology of chitika and alexa is ajoke they are harrasing bloggers by putting in some ranking system by forcing the users put thier banners and links on their site which is not good,instead sites like google index blogs based on pagerank which is much accurate interms of traffic what you think?

  38. Stefan

    August 1st, 2007 at 12:07 am

    Aside from taking a rather small sample base, the study focuses on advertising related revenue, which imho is too limited. Our blog, somewhere around 7.5k in Technorati, doesnt generate any direct revenue, as we don’t want ads on it . On the other hand, I’m pretty sure we found additional revenue through new clients that came to us through reading our blog.
    As Charlene Li over at Forrester has pointed out plenty of times, the ROI of blogging is far broader because of the relationship building with your readers, and the general imagebuilding going on around the blog. Look at TechCrunch - it’s not only the advertising, but also the investment opportunities, requests for board memberships etc that come to Michael this way, that make up the whole picture.
    In other words - I think this is a totally pointless study :)

  39. Favorite Browser

    August 1st, 2007 at 1:03 am

    Off-topic:

    http://chitika.com/premium_publishers.php

    Now click Products (http://chitika.com/products.php)

    Not Found
    The requested URL /products.php was not found on this server.

    Additionally, a 404 Not Found error was encountered while trying to use an ErrorDocument to handle the request.
    Apache/1.3.37 Server at http://www.chitika.com Port 80

    :-)

  40. Venkat Kolluri

    August 1st, 2007 at 11:28 am

    “Again, the data behind the study is very thin, and using Technorati to determine the top 50,000 blogs may not be a perfect indicator either.”

    Absolutely. This study is our first attempt in this direction and to start off with we used data from our network and public sources like Technorati to take a first stab in estimating the dollars in the blogosphere. Our goal is to refine and continue this study on a regular basis with richer data sets and publish/share the results.

    We are very much interested in feedback, suggestions, to help us refine/update the study and the methodology: blogdollareport@chitika.com

    Venkat Kolluri
    CEO | Chitika, Inc.

  41. Patrick Ryall

    August 1st, 2007 at 4:02 pm

    Greetings all, well what a reaction to a little statement. If the figures are correct or not it still provides an interesting look into the world of blog dollars.

    Of course it is no easy road to earning an online income, but it is not as hard as many make out I believe. I have been self sufficient from the Internet for over 12 months now, and true it has taken some doing but what doesn’t take effort in this world.

    If you were to pick a business model and open it in the normal world how well would it take off? Starting any business is harder than it used to be just because of the times we live in.

    So if any business we plan takes effort a sprinkle of luck and a true dedication to get it going than it makes sense to put the same dedication into a business that if done right will allow you more time to pursue other money making en-devours.

    Just remember the No1 rule; if you work for someone for a living, you do not have time to make money.

    Have a B L O G G I N G good day and chin up because there is money in blogging. :)

  42. Andy

    August 1st, 2007 at 4:14 pm

    I couldnt agree more with Patrick. Just image what you can earn if you can position yourself to between 49900~50,000?

  43. web site traffic tips

    August 1st, 2007 at 4:50 pm

    Not sure I’d use Technorati numbers for the top 50k blogs either. Their numbers are heavily influenced by how many other blogs link to you from within a post.

    If you’d like a quick & easy way to get a link to your blog from a post within 101 different blogs, enter your details here:

    http://hitsusa.com/blog/22/blog-promotion-101/

    That’ll boost you into the top 100k blogs all by itself.

  44. Debi Jones

    August 1st, 2007 at 4:54 pm

    Agreed with all of the questioning on validity of the data. And the first fallacy is using Technorotty rankings.

    Links to my blog from the Huffington Post, Valleywag and even USAToday are not visible on a vanity search. Does Technorati truly not index these publications? It’s unclear what the proper measure should be for blogs as large traffic isn’t as influential as targeted traffic, and no valid measure of influence has, yet, been developed.

    Technorati may have had a valid measure in the early days of the blogosphere when it was homogeneous, i.e., 99% tech blogs, but this is no longer true. One example is that TC has a higher in bound link rating than most mommy blogs, but if you’re Disney who would you prefer to engage on an upcoming movie release? Before you answer, Google the connection between the success of “March of the Penguins” and mommy blogs.

    Following Neilsen’s attempt at finding different standards for measuring social media, including blogs where the time spent on a site by visitors may inform influence over raw hits, is worthy of attention.

    There maybe an element of preserving the old guard, here, with several of the Technorati created A-listers writing about the service recently. Have you noticed?

  45. political forum

    August 1st, 2007 at 7:09 pm

    Technorati is not reliable for showing the most hit blogs? What is then?

    tom

  46. Ozh

    August 1st, 2007 at 11:35 pm

    Seriously, who is still running Chitika these days ?

  47. Pankaj

    August 2nd, 2007 at 1:46 am

    The 80/20 comparisin is fallacious, since a majority of the blogs out there are non commercial.

  48. kurt

    August 2nd, 2007 at 7:17 am

    What constitues a “Successful” Blog site? Is there a place that actually breaks down the criteria for successful blogs and how this platform and steps that show how this outline can be obtained by someone??

    I think that the 50k mean 50,000 blog sites, and the 500,000 is the money…

    http://www.tsbo.com

  49. China Law Blog

    August 2nd, 2007 at 9:15 am

    I find it interesting that Mr. Lewis has called out our blog as an example of one that brings in business (and I thank him for the kind words on our content). Though that is obviously a very important goal of our blog, I have found that it provides so much more than that. It gives us credibility as China law experts, which, in turn leads to two things. One, we are constantly getting interviewed by the press. Two, our clients and potential clients know who we are and where we stand. This means that those who like us call us and think we fit in with what they are trying to achieve in China will call us and those who don’t like us or do not think we are a good fit, go off and call someone else. In other words, it works as an amazing pre-screening device.

  50. Anita

    August 2nd, 2007 at 10:18 am

    The $500,000,000 is a bogus number. They just took the Chitika #s and multiplied them by 3. I don’t know any top bloggers who receive 33% of their revenue from Chitika, it’s typically more like 5-10%. If that’s the case, total revenue for the top 50K blogs is closer to $1.5B (assuming their methodology is valid, which I contend below that it isn’t).

    Here’s a set of decent assumptions for calculating:
    - the top 10 average $2MM per year (e.g. Gizmodo, TechCrunch, BoingBoing, Engadget, etc.)
    - the next 40 average $250K per year (all the bloggers I know in this bunch make about that)
    - the next 50 average $100K per year
    - between 100 and 1000 average $50K per year
    - between 1000 and 5000 average $10K per year
    - below 5000 average $1K per year (this is generous, since most of these are personal blogs)

    Using those averages, the total blogosphere is earning:
    top 10 = $20M
    11-50 = $10M
    51-100 = $5M
    101-1,000 = $45M
    1,001-5,000 = $40M
    5,001-50,000 = $45M
    = $165M

    Seems far more reasonable to me.

  51. ultrafox

    August 2nd, 2007 at 10:50 am

    All this hullabaloo for a study purported by Chitika, the laughingstock of the internet. Consider the source, peeps!

  52. Jonix Konios

    August 2nd, 2007 at 5:48 pm

    i think this can be possible. none of the real big blog earners reveal is true earnings, that’s a fact. if we think that 500M ($500.000.000 ) for 50k (50.000) blogs is 10k ($10.000) per blog and per year!!! Which means $10.000 / 12 months = $833 per month .
    This numbers for me are low, i think some big blogs itself, make more than 100k monthly. Just see the case of techcrunch.com itself, each ad spot is 10k mont, it has 8 spots, which means at least 80k per month.

    Based on this, i think that $500M are low.

  53. Stephen Chan

    August 3rd, 2007 at 2:31 pm

    Headlines like this spawn a whole “internet gold rush”. Seems like the top blogs are Blogs who blog about blogging.

    How’s this for an estimate income than Chitika’s study… some kind of Inverse Power Law:

    Blog income = $1 Billion / Alexa Rank

  54. srinath

    August 19th, 2007 at 6:45 am

    i hope to join

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