A Further Thought... And Perhaps More Heartburn For An Old Friend

It wasn’t until I read various posts (here, here, and here) which come to my attention yesterday that it dawned on me my old pals Roger and Charles had ditched 230 of the 300 bloggers they originally signed up. You really do miss out on so much while being stabbed in the back...

Anyway, now I know those two boobs are never going to make a dime.

To put it plainly, the crux of the biscuit of the business model I was putting together for Tulip Advertising was based on getting as many high quality blogs signed up as humanly possible. And by high quality, I mean high quality... not just high traffic. The last thing you’d want to put in front of either an potential advertiser would be a high traffic site like Daily KOS or Atrios. They’d throw you out the door before you could say “Screw ‘em”. No, you'd pick up the sites that gave you the demographic you needed to attract advertisers, irrespective of traffic. That demographic is high education, good job, plenty of income. If a site provides you 300 unique visitors a day that meet that profile, you sign them up. There’s no reason not to. And if it takes 100 high quality sites to match the number of morons at KOS, well then you sign up 100 sites.

The reasons for doing so are many:

1. You really do want as many people viewing as possible. Once the technical infrastructure is available (software and servers), placing it on a site is easy; there are no other meaningful fixed costs to worry about. Acquiring a site means no more than seeing whether the site meets the requirements of your profile (You’ve got a protocol in place to do that, right, Roger?), testing via a visitor survey and a site meter, getting a contract signed and putting a button or two on the site. So why limit yourself to 70 sites, or 300 sites for that matter, if the variable costs of bringing them on board are negligible? If your breakeven point (You’ve calculated that, right, Roger?) for a site is 200 unique visitors a day, then you sign up every high quality blog giving you 250 visitors a day without even thinking about it.

2. You really do want as many high quality bloggers writing as possible. Stuff happens. Bloggers will get sick, some will die, some will lose interest and some will be forced to quit by circumstance. Remember Steven Den Beste and U.S.S. Clueless? A great blogger with a great high traffic blog who is forced to quit blogging, literally overnight, because of serious illness. That is precisely why you sign high quality blogs irrespective of their traffic... You can, with some effort, get them enough exposure to lift their traffic. Quality will bring traffic if you market that quality in a methodical and consistent manner (You’ve got a plan to do that, right, Roger?).

3. Beyond that, why would you want to limit yourself to nothing but political bloggers, if you’re serious about making money via advertising? One of the things I had started doing before Roger and Charles gave me the heave-ho was investigate other types of special interest blogs. Why wouldn’t you want to scour the internet for high quality blogs on cooking, photography, crafts and on and on...? They exist, and Christ, it doesn’t take a genius to see that one way to capture advertising dollars from, say, companies selling cooking supplies, gourmet food, and cook books is to show them you’ve signed up 25 great cooking blogs that generate, say, 10,000 unique visitors a day. Those advertisers would kill to get the chance to do their thing in front of 10,000 people who are where they are because they are passionately interested in cooking and food.

There are probably a few more good reasons why Pajamas Media should be signing up bloggers by the boatload. Given the three I’ve listed above, it’s actually pretty difficult to make a case that Roger and Charles are really serious about making the advertising portion of Pajamas Media work. There just isn’t any compelling business reason for turning away good blogs. If, for example, Michael J. Totten gets 4,000 unique visitors a day, as opposed to Roger Simon’s 40,000 a day, why turn a Michael Totten away? He’s got a hell of a blog. With a little effort, you could get his numbers up... and in any event, you’d still make more money than if you turned him away altogether. Am I right?

So the question then becomes this: Why would Pajamas Media go through to the trouble of signing up 300 bloggers, only to then dump 230 of them. Certainly it wasn’t to get themselves a whole lot of goodwill. Nor does it make them money. So then why?

Well, perhaps it goes back to my Reason The Second: Lack Of Assets, Therefore Effort. If Roger and Charles don’t have the time or inclination to do the administration themselves, and won’t put up the money to hire someone to do it, then about the only way to get themselves unburied is to reduce the number of bloggers to a manageable level. It makes sense in the short run to do this, even though it doesn’t in the long run. Besides, I’m sure Roger’s convinced he can charm all the bloggers he dumped into coming back on board at a later date. Roger puts great stock in his own personal charm.

Then again, perhaps it goes back to Reason The Fourth: Lack Of Interest. If I’m correct in stating that what Roger and Charles really want is to become New Media Superstar Journalists, it could be that they are tailoring the business to reach that particular goal (this dovetails with my Reason The First: Lack Of Focus). Perhaps they've done some math and come to the conclusion that they can make enough money from the advertising they generate from the 70 they have on board to get them to Journalist’s Heaven. If that’s really what they want, once reached they can just ditch the advertising business altogether and get down to what they really want to do.

In any event, none of this bodes well, in my opinion, for those under contract. Like I said: If you have expectations, lower them. And if you got dumped, well, perhaps it was all for the best. Certainly I’ve seen enough over the past six months to lead me to believe that if I was with Pajamas today, and it was doing what it is actually doing now, I’d be one unhappy camper... That said, I still look forward to having one of Roger's ulcers named after me.

Comments

[Kathleen]

ah the old rightie standard. amazing, you couldn't get through two posts without insulting Kos and Atrios. then I saw your blog list. and couldn't stop laughing.

[DennisThePeasant]

It would never occur to you, I suppose, that perhaps behavior, rather than politics, might be the determining factor in not taking KOS and Atrios to advertisers. Being foul mouthed, crude and scatological is not always a positive in marketing products. I'm sure their are some rude and crude VRWC sites out there, but I couldn't think of any other than my own. Sorry if I offended your delicate sensibilities.

[VietPundit]

A Kos and Atrios supporter who thinks there's something wrong with insulting other people? There's a word for this, but I can't think of it at the moment ...

[PeterUK]

Kos isn't a lefty,he is a millionaire businessman who has found a market for the sad ,deranged,infantile and inadequate.It's a bit like putting up a chalk board in a urinals and leaving a tip jar.

[Uncle Fester]

"There's a word for this, but I can't think of it at the moment ..."

I know! Hypocrite!

Uh, no, sorry, not in-your-face enough...

[Uncle Fester]

I'm still convinced that Dean, Kos, Atrios and several others of their ilk are operatives of Master Rove.

[Steven Den Beste]

One of the big things that bothered me about this project from the first time I heard about it was money.

This kind of project (and almost any other) always loses a lot of money for the first year or two of operation, even if in the long run it turns out to be profitable. You cannot start something like this without some sort of major investment behind it.

Last time I saw any solid info about the advertising plan (admittedly months ago, so it may no longer be correct) it seemed that PJ Media was promising its affiliate bloggers a lot of money to run ads, whether PJ Media itself actually had any ads to run. That's money flowing out, without necessarily any offsetting income. Where's it come from?

There has been no sign whatever that they've got a VC backing them. The impression I came away with was that they expected it to be self-financing from the very beginning. As Dennis says, the impression was that they were going to have to turn eager advertisers away, and would have no trouble at all filling all those paid ad slots with paying ads.

If that's truly what they expect, then this is going to be a trainwreck of mammoth proportions, and the ultimate result is going to be lawsuits.

[DennisThePeasant]

My understanding is that Pajamas Media did spend most of the first quarter of the year attempting to line up venture capital. But since it was Roger who told me that, it might not be true.

[PeterUK]

Dot.com bubble writ small?

[Scott Ferguson]

Having noodled around with my own little venture a bit, I'm coming to some hypotheses that I want to test:

1. Making money from advertising need not be a simple "eyeballs to advertisers" equation. High value added can occur when the RIGHT advertisers are introduced to the RIGHT eyeballs. (Life was either the first or second largest magazine in the USA when they stopped publishing weekly. No advertiser wanted to pay top dollar for all those undifferentiated eyeballs.)

2. The internet is so bloody cheap that you don't have to generate much revenue to turn a profit. With such economies, bootstrapping is more rational than venture capital for business development.

3. Because people use the Web to create narcissistic virtual realities, the key to sustaining a Web-based enterprise is not by marketing a commodity, but by developing a community that will support you.

Pajamas Media seems to be trying to overlay old media templates on a new media. In other words, they are both popular individually, but in collaboration it seems to me that they don't understand why.

And from my standpoint, thank goodness.

[Fresh Air]

I'm not sure I totally understand what the complaint is here. I believe the idea is to use a stable of bloggers as (correspondents or editorialists) who will put out reports that read "Special to PJ Media," or somesuch--and, based upon a private e-mail I got from Roger--pay these people initially with cash. After the embargo ends, they also will receive traffic from the mother site.

Obviously, you need to work a manageable number of writers who fit stylistically and otherwise. Seventy sounds like a lot to me.

As a former I-banker, I can tell you with names like Michael Barone on board, there is plenty of VC money for this idea.

[DennisThePeasant]

Part of the allure of PJM was the promise to provide a revenue stream via advertising based at the blog level and contingent on site traffic. That's what I've been talking about, not the journalistic side of the equation, which was developed while I was waiting for Roger and Charles to sign the incorporation papers for Tulip Advertisng... and about which I couldn't give a shit.

[Scott Ferguson]

It still sounds like Mickey Rooney and Judy Garland putting on The Big Show in Pa's barn.

There are venture capitalists, and there are "venture capitalists."

If a well known venture capital firm such as WR Hambrecht + Co was funding Pajamas Media, then we would know that the business plan had been gone over with a fine toothed comb, and that they were expecting it to throw off a lot of cash really fast. That would be a solid endorsement.

Then again, if the "venture capitalist" was some California plastic surgeon with more cash than sense, BFD.

If they did, in fact, have the backing of a reputable venture capital firm, they should make this fact public. It will only enhance their prospects for success.

As for the numbers you quote ... hmmm let me see ... 70 authors x avg $1,000/month, added to SG&A costs ... infrastructure costs ... plus the VC firm's 20% chunk ... they'll have to be clearing what, $2 million the first year to break even?

[PeterUK]

What a VC would do is what the dot.coms did,float shares to their friends whilst the price was going up,selling to the public when the last ounce of profit had been extracted,taking the money and running.

[Scott Ferguson]

Such a person would not have any friends left. Pump-and-dump operations are illegal anyway.

[PeterUK]

That is what they did.

[Random Guy]

"Being foul mouthed, crude and scatological is not always a positive in marketing products. I'm sure their are some rude and crude VRWC sites out there, but I couldn't think of any other than my own."

Ah, so therefore we can gather, by extension, that you and your entire readership are also morons? Interesting.