UPDATE: Squash feedback suggests a $10 mil valuation is pretty unlikely and $4 to 5 mil is probably more realistic.
So 2 mill for the B5 boys and girl?
Unfortunately, that figure would be much more useful if Rick Segal of JLA Ventures let us in on the stake they and BrightSpark got for their pound of flesh. But with those nice round figures lets take a punt and guestimate a valuation around the $10 mill mark, which would pretty smart multiples for a business model that the jury is still out on…
I go back and forth on blog networks. I do believe blogs have a lot of evolving to do and will become more complex and richer and gradually incorporate more social media functions and value-added functionality and so aggregating the technical function is going to be useful. Probably more importantly, Blog networks can also invest properly in SEO which is something your independents struggle to have the time or resources to do and its this that in many cases makes or breaks a blog.
The issue I question with blog networks is the margin-factor. B5 blog guru Darren Rowse reckons it takes a year to put a blog on the map. That’s got to mean your looking for a 2-year turn around before you get a positive return on each new blog you’ve invested in. You then have to hope that a) your blogger hasn’t run out of steam b) they haven’t got so successful that it now makes sense for them to go out on their own.
You hear increasngly around the traps of blog and podcast networks who are locking their talent into really, tough contracts – ‘we own you mofo’ – and with these kind of economics vs risk you can see why.
B5 have said the money will help them put on a VP of sales and I hope they get a good one. Coming from a media background, its impossible to understate how important it is to have an effective sales function and its no difference with blog networks. Problem is this kind of talent ain’t cheap. That’s going to hit your margins too….
Rick also riffed a bit about Doc Searl’s Intent economy. Not sure if I buy it. B5’s biggest traffic generators by far are its celebrity blogs, which don’t exactly fit this model. If I see a future in blog networks, I think its probably going to have to do a lot with reader profiling. As a single-site publisher I may not be able to build up enough of a profile on you to do some serious ad targetting but if I publish a couple of hundred blogs and you might visit 5 of them I can then start to develop a pretty neat profile…