The economic weight of the blogs

If you're one of the millions of active bloggers, you probably think that your own publication is one of the most important ones in the world. And from your point of view, you're certainly right. But have blogs changed the global economy? Only marginally, and in a minuscule way.

If you're one of the millions of active bloggers, you probably think that your own publication is one of the most important ones in the world. And from your point of view, you're certainly right. But have blogs changed the global economy? Only marginally, and in a minuscule way. Companies selling blogging tools and related services made tiny amounts of money. The advertising market grew up only slightly. And companies just added another communication tool to their arsenal. That's about all. Blogs represent just a very small drop into the big ocean of the IT and the media worlds.

So what exactly is the economic impact of the millions of blogs? Let me provide some answers, like a research company would do, except I haven't seen many studies about this particular aspect. And like the research firms, my estimations below are almost certainly wrong.

In this column, I'll look at the different actors of the blogging world: the companies that sell publishing tools; the advertising market; the consumer market; and the impact on companies.

Let's start by the number of blogs worldwide. Are there 10, 30 or 100 million bloggers today? Assuming that 10 million blogs are active and that 10% of bloggers pay an annual fee of $50, this represents a worldwide annual market of $50 million for all the companies selling blogging tools. Even if I'm off by a factor of two or four, this is a very small amount compared to the sales of the Microsofts and the Oracles of our world.

Of course, you'll tell me that the blogging world has generated some huge deals, like the sales of About.com, Topix.net or Weblogs.inc. But in fact, the acquirers of these companies didn't purchase blogs. They bought networks giving them access to a market they didn't have to build.

In fact, these companies, such as the New York Times or AOL, found a way -- cheap or not, this is not the point -- to increase the market for their ads, where the money is.

But how much additional advertising money was attracted to blogs? The various programs, such as Google AdSense or Amazon affiliate partnerships, don't break their numbers by markets, so I just have to make some assumptions here.

For example, Darren Rowse, the guy behind ProBlogger -- and 20 other blogs -- conducted an informal survey in November 2005. Of the 1,205 people who answered -- honestly or not -- 45 bloggers reported an income in excess of $10,000 per month, while the vast majority was earning about $10 per month. If we assume that one million bloggers are making $120 per year, this is an annual market of $120 million. If we add similar programs -- and the money made by Google and others -- the global ad money generated by the blogosphere almost certainly doesn't exceed one billion dollars in one year.

Besides these numbers, you'll also tell me that the power of the blogs is far more important than I think and that a few bloggers can almost destroy a company and its brand. Case in point: Kryptonite and the "bic pen incident." But have you read this Dave Taylor's column in his Intuitive Life Business Blog, "Debunking the myth of Kryptonite Locks and the Blogosphere"? In this interview with Donna Tocci, Public Relations Manager for Kryptonite, you'll discover that the company was not really affected by the attacks of the bloggers. But simply put, it takes some days to define a plan for a lock exchange program.

In other words, is the consumer market affected by blogs? Probably yes, but once again, only marginally. You might purchase more goods online than two or three years ago, but not because of blogs. It's just that you feel more comfortable giving personal information now.

Finally, let's look at the last actor, the corporations. Big companies have been slow to use blogs for their external communications. Just read "The Inside Story on Company Blogs," an article published yesterday by BusinessWeek Online. Here is a short quote.

According to The Fortune 500 Business Blogging Wiki (a list of blogs provided by employees about their companies and products), only 22 of the 500 largest U.S. companies operate public blogs from their executive suites. That amounts to a measly 4.4%.

Of course, companies are also using blogs for their internal communications and to manage projects. But this is just another technological tool which just complements the other ones already in use.

As a summary, the blogging phenomenon is just marginal economically speaking. But bloggers themselves are different because they're writers, they have a voice and they're real customers of real products.

Now, you're totally free to disagree with me about the power of blogs. So feel free to post a comment or drop me a line.

Sources: Roland Piquepaille, February 15, 2006; and various web sites

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