An interesting trend has started over the past couple days. This weekend Jason Calacanis announced the he was no longer blogging and was instead switching to a newsletter. Initially he suggested that he was limiting the number of subscribers to 750 but soon enough that number was surpassed and there is no sign that it’s stopping. Then today Caroline McCarthy published that Glam Media would be joining the newsletter market.

Blogs clearly have there limits when it comes to revenue and as such most blogs extend into events, as I wrote about the over the weekend. The other model is newsletters and while the majority of people stuck in the social media bubble argue that this in a bad idea due to e-mail overload, my guess is that the average person doesn’t have the same problems that many of the readers of this blog do.

Even if they do have e-mail overload, it’s clear that e-mail newsletters remain to be a viable business model. Just take a look at Daily Candy or Digital Media Wire. Both have developed substantial business models around newsletters and events. The best part of the newsletter business is that once you have subscribers they are much more locked in than a blog where you need to encourage readers to come back on a daily basis.

In the world on new media, developing a sustainable revenue model continues to prove to be challenging. Even still, numerous companies are trying to take a shot at it as the business models for traditional media outlets become shaky. All of this is a race toward what appears to be inevitable acquisition of the best developed new media companies.

Do you think newsletters will continue to be a legitimate business model or do you think the trend is toward blogs and other platforms?

Over a year and a half ago I started blogging on a regular basis after hearing one of my ex-clients consistently mention the names of writers that I was completely unaware of. Today, names like Mike Arrington, Om Malik, Rafat Ali, Richard MacManus and more recently Matt Marshall and Henry Blodget have become common for many in the industry.

Over the past couple months, many wondering whether or not these sites would ever amount to something big have received validation for their visions. ArsTechnica was sold for $25 million and then last week PaidContent was acquired for a rumored $30 million. Now Kara Swisher reports that Techcrunch could soon sell for between $20 and $30 million.

Many believe (as well as myself) that this is only the beginning of a continuing trend of consolidation. Considering the downturn in the economy, consolidation makes a lot of sense nowadays. So when all is said and done and the consolidation is “complete” with the technology blogs, who will really end up the winners?

Still an Incestuous Community

Today I sat in a deli chatting with a girl who’s studying in a university program entirely about social media. While it was difficult to believe that there are actual programs for social media, she appeared to be unaware of sites like FriendFeed, Twitter or any of the new iPhone applications. We did engage in a great conversation though about the future of media and it was clear that this was a topic that she regularly discusses.

As usual, the university was successful at teaching much of the theories but much less effective at teaching practical things. This isn’t a dialogue about effective educational strategies though. What became clear almost immediately was the little bubble that I exist in. I have a few hundred friends on Twitter, FriendFeed and Facebook that I regularly discuss the hottest trends with which are being published on my blogs and larger sites like Techcrunch, Read/Write/Web, Venturebeat, etc.

Nobody else is part of this conversation though and while some people that were less vocal in the community become more active an more noticed, there are few people (in my own opinion) that are rapidly joining the conversation. Instead, we continue to have our watercooler talk about the hottest new trend in the valley (and other emerging hot-spots). Rather than the watercooler though, we hang out on FriendFeed, Twitter, Facebook and for me occasionally Plurk.

The watercooler talk only builds personal value though, giving many of us a strange sense of belonging. At the end of the day though, my FriendFeed really doesn’t add much value to the world and thus cannot easily result in money.

Where is the Value?

So if the various online social activities I’m involved in don’t really build much value outside of personal gratification, where is the value? Well, it’s clear that there was value in the larger blogs that were acquired but what where was the actual value? For Ars Technica it was clear that the site has a substantial amount of traffic and they obsessively cover technology. That was their value. The company is simply a technology publication though.

Compare that to PaidContent.org where the traffic may not have been as substantial but it attracted the right audience. The company also regularly hosted events including conferences and mixers which generated a substantial amount of sponsorship revenue. On the surface it appears that events are a much more lucrative business for the company. It also appears that they don’t have close to the amount of traffic that Techcrunch or Ars Technica.

PaidContent’s value? They obsessively covered and connected the digital industry.

Two Winning Strategies

So no matter which way you look at it, obsessive coverage of a specific niche or industry is a pre-requisite to building a successful new media entity. The second component is where strategies can differ.

Breaking News
If you want to build up a substantial following and consistently grown in numbers you must always be breaking news. In Glengarry Glen Ross, Blake (played by Alec Baldwin) says “Always, Be, Closing.” Mike Arrington on the other hand would tell you “Always Be Breaking.” Techcrunch and a number of other sites are in the business of breaking news.

Breaking news will generate a substantial following and will help you attract temporary boosts in traffic. The problem with this model? You’ll never sleep … ever. It’s unsustainable (unless you are Mike Arrington) and there is no end.

Connecting An Industry
The second model, which in theory could be merged with the first model, is connecting the participants in an industry. Hosting events and providing platforms for people to connect in an industry is the second most important component. Tech newsletters have been able to compete in this regard as they have a substantial reach (30,000+ subscribers for the large ones) and regularly produce events. The newsletters don’t have the requirement of breaking news though.

The offline component of media companies has practically become a necessity. The smaller more targeted media companies end up finding themselves producing events more regularly whereas the large media companies have the luxury of traffic generating enough revenue.

The Future

So where is all this going? It’s pretty clear that consolidation will happen quickly. The old media giants can snap up the new media competitors easily as they sit on a ton of cash. Within the new media companies, I believe that we are going to also begin to see consolidation. Breaking internet tech news has practically become dominated by Techcrunch.

A few other companies can compete but ultimately consolidation among the remaining news-breaking sites would help create a viable competitor to Techcrunch. While Mike Arrington’s Techcrunch could have somewhere between $2 - $4 million in the bank (complete guess), it won’t be enough to snap up the competition without a round of funding.

The old media companies are looking to acquire companies that compete in terms of content, traffic and have a hold on their industry. The next 12 - 18 months are going to be interesting because we are going to start seeing consolidation in the smaller sites which I believe will help to form no more than 5 to 7 technology media giants.

Do you agree that this will happen? Do you think the smaller entities will be able to put their egos aside to allow consolidation or does everybody want to run the large giant tech media publications?

For the past few days I was in Chicago to attend the Tech Cocktail Conference. Congratulations to Frank Gruber and Eric Olson as the event was extremely successful and appeared to go off without a hitch. One of the afternoon panels was on raising venture capital and included an awesome lineup including Brad Feld, Eric Olson, Kirk Wolfe, Rob Schultz, Matthew McCall and Bruce Barron. I had the opportunity to ask the last audience question for the panel. I asked them if they blog and why they do or don’t.

It actually ended up being split about 50/50. The reason I asked was that one of the venture capitalists (VCs) had said toward the beginning of the panel that Brad Feld and Fred Wilson tend to end up getting the best deals because they are industry leaders. While I agree that most knowledgeable entrepreneurs will seek funding from these two, I also think that they will seek funding elsewhere.

In my opinion, one of the most important competitive advantages that Brad Feld and Fred Wilson have are their blogs. They are transparent in turn making them more trustworthy. In his blog post today Fred Wilson states, “If you want to be a top tier venture investor, you must be recognized as one of the experts in the field you invest in.” How do you become recognized as one of the experts?

According to Fred, “The way you do that is you work for at least ten years in the industry, getting operating experience, building a killer rolodex, and learning how the business works from the inside.” The way that you share your experience with others is by blogging. As you blog during the years that you gain experience, others also see this, learn from your expertise and eventually seek your expertise.

The key to blogging is the same as the key to working out: you must be persistent. You must also be consistent with your writing. Do this and you will suddenly be on the road toward becoming an industry leader. The amazing part is even with this knowledge, most people won’t do it. Just like everything else in life, they have excuses.

While boiling down the source of an individual’s lack of leadership to the lack of a blog is unfair, I frequently think that blogging could be one of the simplest solutions.

The real test of a smart business plan is: what is the value proposition for the user. When it comes to blogging, what is the value being offered? You can try to provide breaking news, try to provide insight or try to provide actual research findings which you then resell to companies (Forrester’s model of business). Each model requires a different strategy and each model has its own way of generating revenue.

The most recent discussion taking place among a number of blogs is what does the user ultimately want? As a publisher, I know that I would like all users to visit my site and post comments for each of my articles. Unfortunately, people post comments on my wall in Facebook, they send me messages on email and Facebook, send me replies on Twitter and once in a while post a comment on FriendFeed. Once in a while they post a comment on my blog but most of those comments come from people that found me via some news aggregator.

Duncan Riley has effectively summed up the challenge:

If blogging 1.0 was about enabling the conversation on each blog, blogging 2.0 is about enabling the conversation across many blogs and supporting sites and services.

If we have suddenly all simply become part of the conversation then perhaps blogging is simply about producing more focused content throughout various channels than other people currently provide. For instance, if this site is focused on social technology, perhaps I should notify people on Twitter of all sites that I bookmark on del.icio.us related to social technology. Also, go post comments on anybody’s FriendFeed that has content surrounding my subject.

The reality is simply that blogging isn’t dead but the conversation is going to take place elsewhere and not just on your site. While we would like most of the conversation to take place in an environment branded by us, it just simply won’t happen. I think that I need to most definitely update my own strategy to adapt to the changing environment.

Rather than just posting content in the confines of my blog (which is what I’d really prefer to do), it’s time to take it to take the dialog elsewhere. Do you think blogging in itself provides enough value or have the times truly changed?

You’re sitting in front of your computer, the light from your monitor burning a hole in your retnas and all you want to do is get up another post. You finally find something to write about but while writing you open up another tab in your browser and check out your top 5 or 10 new sources to make sure that there isn’t something more urgent that needs to be posted about. This isn’t how it starts. This is the beginning of the end.

It starts with the rush you get from a surge in traffic to your site whether it is coming from Digg, StumbleUpon, Techmeme or any other news aggregator. The rush isn’t a warning sign, it’s simply one of the first steps toward blog addiction. The rush that you feel from the jump in traffic doesn’t last long. As you look over your Google Analytics, MyBlogLog traffic counter, incoming traffic from Hittail, feed stats on Feedburner and a number of other sources, you realize that you need more.

The biggest problem with a blog is the emotional attachment that you had from the onset. You don’t want to give it up and you only want more, more of that rush of seeing your name plastered atop some random news aggregator that says you are king of the hill, if only for a few minutes. Few people congratulate you but somewhere in the back of your mind you are thinking that you can take on anybody.

It is at this exact moment that suddenly you are becoming a full blown blogger and potential addict. Us bloggers love to talk about ourselves because we are the experts. 95 percent of people are experts in themselves but a smaller 5 percent decide to write about something else outside of our personal lives. For that smaller segment, our writing is all the more important because we want to be honored for the written translation of our momentary thoughts of genius.

All day long you will begin to search for those thoughts of genius and if you’ve become a blogging addict, thoughts of genius eventually begin to merge with mediocrity. At this point your mind is buzzing from content exhaustion but all you can do is continue to write, continue to push out that next sentence. For the typical blog addict, sentences rapidly lose their value and words suddenly become filler.

Am I apologetic for the written filth that I frequently produce? Not at all. I am a blog addict and I know that somewhere in there is a hidden gem and my readers will be so fortunate as to find that gem and hold it close to their hearts. I also know that I’m only kidding myself because in reality my readers only glance over my content which has now become a source of their own content exhaustion.

Really, all you need is that one hit. That hit where suddenly you are catapulted to the top or at least standing with the leaders. That one hit leads to multiple hits on your website and suddenly the hudreds of visitors that you have viewing your name for half a second suddenly mean something to you. A few of them might even stop to say hello. Hi!

While I will never know most of you, I will know some and that’s all that matters. Among us blog addicts we all know what that rush feels like and for some reason we have begun chasing after it. We click publish even though we know a post looks like shit just because we think that post could make us king of the hill again.

We fight to get a press release 1 minute earlier than the others because in our world somehow this 1 minute has suddenly made a difference in our lives. At this point they might as well just connect me to the computer and feed me content because at some point it became all I wanted: more content. David Carr highlighted the vicious cycle over a year ago:

Now I have become a day trader, jacked in to my computer and trading by the second in my most precious commodity: me. How do they like me now? What about … now? Hmmmm … Now?

The cycle can destroy you and I have met many people who it has. I meet them on a regular basis at conferences and various events. I now look in the mirror and see it in myself and suddenly I’ve begun wondering when did life suddenly become about the momentary celebrity? I somehow suddenly crave this attention which is ultimately nowhere near as valuable as that which a family member can provide.

The reality is that expression is part of human nature and we all crave the connection we get when others empathize with that which we express. The blog empowers this connection but just as economics teaches us, it has diminishing returns. That is what a blog addict has to look forward to. While I cannot advise others what decisions to make, I can tell you that I will surely be making new decisions based on my findings while living the life of a blog addict.

Erick Schonfeld has a great post about his first six months working at Techcrunch. The reality of blogging becomes apparent when Erick describes their size and scale:

Despite our small size, we are a global organization. When not traveling, Michael and Mark write from California, Duncan writes from Australia, and I write from New York. Somebody is always online—often all of us. Michael literally never sleeps. It is really unhealthy.

Want to build a massive blog that gets tons of traffic and tons of regular readers? Get used to staying up all night every day. Even the once a day bloggers like Jeremiah Owyang get little sleep. Jeremiah is up in the early AM typing out yet another blog masterpiece on a daily basis. As you build a blog that gains traction the addictiveness of it rapidly sets in.

I launched AllFacebook last May and within a matter of months I was staying up until 3 or 4 AM to get the news still rolling in from the west coast and would get up by 9 AM. This is not a piece on my challenging lifestyle though. The reality is that social media will suck you in and you’ll find yourself producing content via Twitter, Facebook and your blog and suddenly there is not enough time in the day to respond to all incoming messages.

So when the competitors are ultimately willing to go without sleep for years and avoid all vacations, how do you create a balanced life? Is it even possible? Well, success never came easily so the solution is not easy no matter how you look at it. Fortunately though I think there is a way to balance your content, build a business and still have a life. Unfortunately, I’m not there yet but I can tell you what my thoughts are on how to get there and you can let me know what you think.

Churning Out Content is Necessary
Some people will tell you that once-a-day is good enough to build your brand. It really depends on how big you want your brand to be but if you really want to go big you either need to pack a lot of punch in every post (as Jeremiah Owyang or Gary Vaynerchuk does) or write like crazy. As Mark Evans points out, packing a lot of punch in one post a day may be more challenging then churning out content quickly.

Churning out content is also extremely useful for building up your search engine traffic rapidly. Take a look at Alley Insider as a perfect churn machine. They pump out content so fast that chances are you’ll never read all of their articles. This model is also extremely useful for taking up space in people’s RSS readers and forcing people to read your content. The bottom line is that content is still king.

Leverage Brand You
As Gary Vaynerchuk says, your legacy is greater than currency. The best thing to do is become well known for producing regular high quality content on a specific topic. Once you become known you can start to leverage your brand to generate revenue through both advertising as well as consulting (if you wish to do so). There is also the potential to earn revenue through speaking engagements (conferences, etc), hosting your own events and other methods as well.

Separate Op-Ed and News
One of the biggest problems when writing blogs is that there is a mesh of opt-ed and news. Each view comes for various reasons and as one Techcrunch commenter points out it eventually becomes to challenging to follow all of the articles. As such it is best to highlight those articles that have quality content and leave them at the top of the site or in a specific location for a period of time so visitors can immediately find the quality content.

Focus on More Than Blogging
Dave Winer screams that the end is near for tech blogging! While I disagree with Dave, the Techmeme pile on is an issue that will eventually be resolved. The reality though is that more people are becoming part of the conversation and that’s all there is to it. While building your blog to a minimal size is critical, once you start reaching a critical mass it’s a good idea to expand beyond blogging.

Unless you want to become a full-time blogger (which is inherently bad for your health), I suggest you expand into other areas outside of blogging. You were already willing to put in the time and effort to get your blog going, you might as well figure out some ways to profit from it. As I explained under “Leverage Brand You” there is more to this world then blogging, and some of it actually can make you money! So build up that blog but build it right because the last thing we want to see is the same old story.

Then again, we all love great stories so if you can tell it better, go for it! What do you think are some good ways to balance blogging and life? Do you think the end is near for tech blogs?

An article in the New York Times highlighted the challenge of making a business out of blogging. They suggested that you blog regularly but don’t expect a significant pay day. Ultimately, the blogging can lead to other things. The New York Times is completely accurate aside from a few blogs that are generating relatively significant revenue.

There’s not as much money in building a blog for most people because you need to generate a substantial amount of traffic before it makes a lot of money. This morning while getting ready for the day I realized that the real value is in the community. Gary Vaynerchuk is the person I always use as an example of someone that has successfully built a community. He also knows that building the community will reward you greatly. Check out his video:

So often I simply write content but I’ve realized that the real value is in building the community and providing them with a platform for discussion. I’ll be working on that for Social Times. If you own the platform for the community, there are many other things you can do to add value and generate revenue. The secret is not in the media but instead in leveraging the media to build a community.

Blogs are strange entities; some people make a killing at them and some plod along blogging for fun. Talking with some friends last night I had a revelation about how blogging and money really work.

Blogging is like collecting coins vs playing the stock market. It may seem like an odd analogy but hear me out. It may have been the sushi and Long Islands talking but this really makes sense.

Basically there are two ways to approach blogging. The first is like playing the stock market. You can take systematic approach to study potential stories, research when is the right time to post, then make your bet that your post will get enough traffic that you can monetize your blog.

The second way, the way I would prefer, is closer to the coin collecting model. Essentially you write about things you enjoy, it is like collecting coins you find interesting, eventually your post will generate interest and people will listen; like finding a coin of value in your set.

Both systems have their pros and cons. The stock market approach, which is taken by larger publications, is great if you have a pool of writers who can toil away like a million monkeys for a million years.

The second approach should be taken by the casual blogger. Essentially someone who isn’t looking to pay the bills from blogging, but would like to see a return from it some day. Write about what you enjoy, never force a story in the hopes of getting a quick return, and you will be writing for years.

I am a coin collector when it comes to blogging. I am lucky enough to have found a great channel to write on while being able to explore topics that interest me. Too often however I hear people complaining that their blog isn’t getting the traffic they would like. From this day forward I will begin explaining blogging as the coin collecting mode and that they have nothing to worry about.
Are you a stock market player or do you consider yourself a coin collector? Or is there a third model for blogging that I have overlooked? Let me know and tell me if any of my coins… posts might be worth anything.