The ad network portion of Pajamas Media is closing up shop as of April 1. Some members of the network are taking it better than others. The bottom line, according to Roger Simon, was red - the network was a steady money loser, with the bloggers getting more than the advertisers were paying. Here's a bit of comment from a venture capitalist's perspective:
I was one of the early readers of what became the PJ Media business plan, due to my friendship with Marc "Armed Liberal" Danziger, who was part of the team at that point. My own fund's prospectus specifically said we would not invest in content, so I wasn't a potential funding source, but I did offer advice and a few introductions to other funds that might have taken an interest in the plan.
My strongest suggestion to the team was to simplify the plan. When I saw it, it included three business ideas:
- A branded destination website and content network with a stable of regular bloggers.
- An advertising network reaching affiliated bloggers' sites.
- A technology play to improve advertising sales and results in the network.
From my perspective, that was two bullet points too many. It's rather axiomatic that a startup venture gets one bet, on the nose. The increasing capital requirements and span of expertise needed mean that attempting to play multiple games usually inflates risk for a new venture, rather than hedging it. I suggested that the team pick their strongest idea and run with that alone. I'm sure the input was appreciated, but it was not heeded.
In the event, PJM found a single source to provide their financing. While having a sole investor inevitably gives up some control, it also lets a team get off the road and on with building the business. At about the same time, the third bullet point above removed itself when Marc left the Pajamas team. That still left two business concepts under one roof, competing for resources.
This week's announcement is just the dénouement of that situation. Anyone who's paid attention knows that the effective CPM for both click-through and exposure ads on blogs s***s. I mean really s***s - like up to an order of magnitude less than run-of-site ads on big, topically diffuse web properties. Gadget, finance or technology blogs can rise above the crowd, but political and opinion blogs tend to be the worst. When readers are focused on a potentially stressing discourse, they don't tend to notice or click on ads. Fancy that! And what did the PJM ad network's stable consist of?
The market has rendered its opinion on the two PJM business propositions, and the ad network came up the shortest. My guess is the combination of the end of election cycle advertising and the recession-driven fall off in general advertising were the last straws. Somebody may figure out how to make blog advertising economic, but it won't be PJM. The company has retrenched into the destination site play, and is trying expand it into the TV-via-Internet market. That's certainly no guaranteed success, but it's also rather axiomatic than a venture investor under duress will plunk on the opportunity that appears to align with a growing market. Is there a play for talking-heads-on-demand? Watch and find out.
Gadget, finance or technology blogs can rise above the crowd, but political and opinion blogs tend to be the worst.
Given the new economic realities... finance is the new politics.
Wonder what the implications are.
Lewy,
I think it depends on which aspect of finance you are referring to. I can see personal finance related blogs being able to avoid a lot of the tension, since they focus more on directly how can a person get out of their current problems. On the other hand, if we're talking a blog that argues which macroeconomic theory is the best way to describe the economy, then you are basically walking into the politics area of blogging, but this time you have math formulas involved.
For blogs, I don't know. For the economy, not good. It never is when political fiat replaces the market to determine outcomes. Part of the background noise of the recession is the sound of capitalists' wallets snapping shut. Crony capitalism is good for the politically connected, not so much for the entrepreneur and his backers.
The anon above is me, Tim Oren. Not everything in the typekey authentication is worked out, apparently.
OK, fixed the profile information at typepad based on evariste's suggestion. Let's see what happens. If this posts under my name, all is well.
I've always understood that the means by which income is derived shows the weakness in any venture.
In that light, I am confused by the LA Times' decision to cut the California section. The base support of newspapers (outside say USA Today and the WSJ) are the local advertisers. Where else am I going to learn the Governor is a boor? Where else am I going to find a sale on surf boards?
Tim, you're still showing "anonymous" on this thread, but "Tim Oren" under "Recent Comments." Odd.
OK, now everything that used to say anonymous is "Tim Oren." It's Marxist revisionism of history I say.
Pretty weird, huh?
#include twilight_zone.mp3
What was apparently going on is that my visible 'screen name' derived from typekey was empty. Probably some issue at typekey itself, since my profile there was derived from my typepad account, where I have a blog. Apparently whatever migration script sixapart ran to do that didn't pick up the name field properly.
So I'm guessing that whatever web services interface typekey presents to WoC passed back something that said I'm validated, but with an empty name field. WoC substituted in 'Anonymous'. (I encountered the same issue at Michael Totten's site, but it just wouldn't let me comment - ergo, the difference is in the site scripting.)
Then I went and fixed my typekey profile based on evariste's diagnosis, and put in my name by hand. Whereupon I could post here with a name. Oh, and I also saw my prior anon post on the sidebar now showing my name. But not the previous posts here. But wait! When I came back following your comment - now they have my name!
I think what's actually going on is that there's a stable, hidden user ID in behind the scene, here and/or at typepad, and the visible 'screen name' is bound to that, probably multiple times with variable duration of caches / cookies. When they expire, the lookup code runs again, and - hey! - now I've got a name.