Michael Blowhard writes:

Dear Blowhards --

How helpful is economics so far as explaining the blogosphere goes? Here's a flourishing, socially-significant field of activity that's undertaken by most of its participants without any expectation of remuneration. Many of them do their blogging and commenting under, ahem, fake names, thereby making not just money scarce but real-life recognition nonexistent. The question isn't just, "Where's the money?" It's also, "Where's the self-interest?" and "What are the incentives?"

(Incidentally, and for what little it's worth: I think economists might very well be able to give an interesting economic account of blogging, I just have my doubts about how well that account would stand up as an explanation.)

These questions occured to me yet again on reading this LATimes piece about how some economist-bloggers are becoming blogosphere stars.

You'd think that this phenomenon -- economists becoming stars in a field that's anything but money-driven -- would have at least a few of them taking fresh looks at some of their pet theories, wouldn't you? "Good lord! What to make of this!" -- why aren't more of them asking themselves this question? A nicely relevant passage from Steve Sailer: "A common theme here at iSteve is how intellectually Aspergery so many economists are. The thinking of a lot of famous economists seems to be vaguely autistic in the sense that they seem disconnected from so many obvious facts about human nature."

Such as, I'd suggest, the pleasures of self-expression, connecting with other people, and perpetrating some completely-useless mischief. I won't speak for other blog-denizens, but when I write postings or cruise other blogs, I'm pitching in because it's fun and rewarding to meet interesting people and to take part in freewheeling conversations. Part of the fun, I'd argue, comes from the fact that it's all so defiantly un-sensible in economic terms.

I suppose I like to think that I'm doing my little bit for opening the general culture-conversation up and providing a place where culture-hounds can hang out and compare notes. But mainly I prowl the blog-world because I find it fun and rewarding. And I find it fun and rewarding because ... Well, I don't know really. It just is. So there.

Another point about blogging: What does the blogging-thang say about how much we love our jobs? According to usage and stats tables, approximately 150% of blogging activity takes place during what are usually considered to be "work hours." Which a non-economist might take to suggest a few things, such as 1) A lot of people are underemployed, 2) A lot of people feel that they aren't able to contribute much of what they have to offer at the workplace, and 3) A lot of people find blogging more rewarding than job-style working. I know that standard economic theory doesn't exactly say that the way things shake out money-and-job-wise is perfect -- just that markets do a pretty good job of suiting people and products to prices and availability, etc. But maybe we could agree that blogging dramatizes that "pretty good" is a very, very long way from "perfect"?

My fave economists -- Wilhelm Ropke, the Marginal Revolution duo, a few others -- excepted from my snarkiness, of course.

Economically speaking, what do you make of the blogosphere? My own contribution: There's a lot more to life than economics knows how to account for.

Best,

Michael

I've read of blogging being refered to as the new salon. Sounds compelling to me. As for me, this feeds my head.

Posted by: Bradamante on December 4, 2006 8:24 AM

One particularly well-known blogger claims to support herself - and an affluent lifestyle it is - primarily from ads running on her blog and various affiliate relationships. No one actually believes her. My guess is that she actually gets regular, interest-free withdrawals from the Bank of Mommy and Daddy.

Posted by: Peter on December 4, 2006 8:54 AM

I make between 50 cents and a dollar a day in ad revenue from two blogs which I maintain halfheartedly - they can go a week or two between updates. Thus, I found Jacqueline's claims quite plausible. Unlike me, she (1) is female, (2) updates several times a day, (3) has a large active commenter base, (4) often gets links from high-profile blogs, and most of all (5) put some serious effort into finding the most effective ad types and positions.

Summing all that up, I expect she was making at least two orders of magnitude more revenue than I, which should be enough to live on in Costa Rica.

That said, according to her the best ads at the time (given her audience base) were for online casinos. Since the US got serious about outlawing online gambling that revenue source has largely dried up, so she's been looking for a real job.

Posted by: Glen Raphael on December 4, 2006 3:40 PM

Peter:
A) Do some research before spouting your mouth off. There are hundreds of other professional bloggers, and most make more than I do, so it is not at all unbelievable that I make $2000/month when there are many other bloggers making $100,000 a year or more.
B) Stop libeling me.

Posted by: Jacqueline on December 4, 2006 5:18 PM

What makes the internet go 'round? Everyone wants to blow his own horn.

I know I do.

;^)

Posted by: ricpic on December 4, 2006 5:53 PM

Quite a lot of males bloggers are disgruntled conservatives that don't like the political climate in which they work and blogging is a way to let off steam.

In today's world a lot of poeple find it hard to take their jobs seriously.

Its not just that they find their jobs boring and are looking for idol amusement.

Since we live in affluent, politically apathetic times, where not many people can get worked up about important issues, there is limited potential to make money from political blogs.

Most commerical bloggers seem to be mouth-peices for mainstream views and product advertising.

However, that may change in the next decade as we head into more "interesting times".

Posted by: nz conservative on December 4, 2006 6:13 PM

Bloggers making "$100,000 a year or more"? Prove it. I find that **very** hard to believe. Why have a dreary day job when bloggings so profitable? Please let us know what bloggers make that kind of money, and what evidence there is for those earnings.

Posted by: Peter on December 4, 2006 7:29 PM

I'm sure there are a few. Stephen King got rich off writing, that doesn't make writing a good way to get rich.

Posted by: SFG on December 4, 2006 9:51 PM

Peter:

For starters, go read the recent Business 2.0 article "Blogging for Dollars":
http://money.cnn.com/magazines/business2/business2_archive/2006/09/01/8384325/index.htm

Some exerpts:

"He's pulling in $60,000 in ad revenue every month." [referring to Michael Arrington, who writes the blog TechCrunch]

...

"Boing Boing, a four-person operation that bills itself as a directory of wonderful things, is on track to gross an estimated $1 million in ad revenue this year. The digital-media news site PaidContent.org, headquartered in the second bedroom of a Santa Monica apartment, is set to post even more than that. And Fark.com, a site packed with sophomoric humor run by a lone guy in Lexington, Ky., is on pace to become a multimillion-dollar property."

...

"Web ad agency Organic puts ad spending on blogs at $40 million this year."

...

"Denton won't discuss financial details, but industry experts estimate that Gawker Media will bring in as much as $3 million in revenue this year."

...

"...Heather Armstrong, whose deeply personal Dooce site is bringing in enough money to allow her family to live comfortably."

...

"Curtis won't disclose his current revenue but insists that he can soon log monthly ad sales of $600,000 to $800,000. Battelle expects Fark to become the first indie blog to earn a million dollars a year in profit. "Fark's going to get there," he says."

That's just one article... personally, I've read dozens of articles about blogging over the past couple of years that report on other bloggers making $100,000 a year or more.

So, basically, if you don't believe that people can make a good living from blogging then you're just incredibly ignorant and completely out of touch.

Posted by: Jacqueline on December 4, 2006 10:16 PM

Can't speak for others but my blog brings in directly some $500 a month. Beer money really (yes, I do like my beer, why do you ask?). So I don't find it unbelievable at all that someone with higher traffic and spending a lot more time on the ad side makes a living at it.

That said, the real value (financially) of the blog is the advertising it does for me as a writer. That's where I actually make a living, getting picked up by other outlets and getting paid.

Posted by: Tim Worstall on December 5, 2006 1:49 AM

I've written before about the covert intellectual at the workplace. Curiously, after leaving my job to work on my own earlier this year, my blogging pretty much came to a halt.

While interviewing for a contract job, a boss said, "I've been doing a little research about you online," and I felt a shiver go up my spine. What sophomoric blogpost of mine from 5 years ago did he come across that I'm going to have distance myself from?

How bankable your blog is depends on how targeted it is and how much effort you can devote to arranging advertising. A geek-acquaintance of mine writes a good techie blog and attracts a fair amount of traffic; enough to make him $100-500 a month. Nothing to make a living off, but it's found money as far as he's concerned. But he's an expert at web design and programming, so not your typical content creator. (also some of his pages are not content but simple web applications).

I think the key to making money is joining a network of like-minded bloggers who give you a cut of the advertising revenues. How you divvy the pie up is an interesting question.

Posted by: Robert Nagle on December 5, 2006 2:06 AM

I don't consider those high-revenue blogs to be blogs at all. They are content providers, more akin to magazines. Most of them aren't online diaries of the writers' personal experiences, which is how I define a blog.

Posted by: Peter on December 5, 2006 12:10 PM

You write as if you haven't heard about the Big Blog Co!

Founded in 2003, if I'm not mistaken.

Posted by: Tat on December 5, 2006 1:12 PM

Oh come on Peter, give in gracefully. You've had your initial assumption blown out of the water (and you doubled your bet by making it a personal attack on Ms. Passey). You got proven wrong multiple times.

It's time to admit you were wrong *and* apologize to Ms. Passey for the unwarranted snipe.

Why have a dreary day job when bloggings so profitable?

I'm assuming that you know the fallacy inherent in the question. There are millions of blogs out there, and a *few* earn money. This does not mean all/most earn significant money.

Posted by: Tom West on December 6, 2006 5:54 AM

Michael – RE: Economics is an imprecise science, and no economist claims that it accounts for all, or even, most of life. Even so, there is a lot about blogging that is easily explained, even predicted, by a basic understanding of economics.

Economists who write clearly can become blogging stars in part because it costs them little in terms of time. I will bet good money that some of them recast stuff from their lecture notes or publications for use in their blogs. And because the journals and books where they typically publish are almost never read by non-professionals, blogging is an easy, and cheap way to popularize their ideas. It may also lead them to get paying gigs writing columns in newspapers and magazines. It’s not much different from an artist putting some free mp3s on a web site in order to attract publicity and sells for concerts and entire albums. And there is, of course, also ad revenues and whatever other deals some of them may have.

Blogging from work suggests that “1) A lot of people are underemployed, 2) A lot of people feel that they aren't able to contribute much of what they have to offer at the workplace, and 3) A lot of people find blogging more rewarding than job-style working.”

I’ve written here before in response to a posting about supposedly wasted work hours that there is an essential fallacy that just because we have an eight hour workday, it means that there is always available work to fill every moment of a 40 hour work week. The forty hour work week is a convention. Some people fulfill every necessary task and have extra time, but are not allowed to take time off. And some people slack off and force other people to work harder or take on more work in order to get a job done.

Ultimately, people blog at work because it costs them little or nothing to do so. Work computers may have faster or more efficient Internet connections than home computers. Blogging from work might drop off or slow down considerably if people had to pay rent for their computers or fill out expense sheets to account for their computer time.

There are a number of economics concepts that account for blogging from work, including the idea of a “free rider.” See, for example, http://en.wikipedia.org/wiki/Free-rider

I do agree that there is something to the idea that people may feel that they aren’t able to contribute to the workplace. For a lot of mostly bad reasons, a lot of workplaces assume that MBA bosses have all the best ideas, and that workers are supposed to do nothing but what they are told. Just as a number of businesses have organized themselves to make customer service non-existent, a number of businesses have also organized themselves to discount employee input. Ultimately, many of these businesses will fail since the market will tend to punish stupidity and inefficiency.

Here’s another little tidbit. Many companies have a policy that anything of value invented on company time or using company resources belongs to the company. No sharing. An employee has no incentive to use the computer for anything useful. 3M has huge exceptions to this rule. That’s how you get nice little employee-generated innovations like post-it notes.

Posted by: Alec on December 6, 2006 6:49 AM

Economically speaking, what do you make of the blogosphere? My own contribution: There's a lot more to life than economics knows how to account for.

Can't possibly disagree with this more. Economics, including neoclassical economics, is concerned with utility, not money. Blogging is enjoyable, hence people get utility from it, so they do it. Perfectly standard economics; perfectly sensible from an economic standpoint.

What I take from it is that people have misconceptions about economics and think that it's just about money. Economics is "people respond to incentives and attempt to maximize their utility, which can be described in a rational, consistent way."

Posted by: John Thacker on December 6, 2006 10:23 AM

Bradamante -- Hanging out at blogs can tickle the brain into life better than time spent with trad magazines, I'm finding. Generally speaking, exceptions allowed for, etc. Do you find that too?

Peter, Jacqueline, etc -- A few bloggers make money, some blogsites are almost magazines, etc etc. But, to pull things back to my point (FWIW), I'd guess that 95% of bloggers don't do it with any expectation of financial gain. I'd guess that even some of the econ blog-stars didn't start out blogging expecting either to become blogstars or to bump up their lecture prices. Which is interesting, no?

Glen -- America has been outlawing online gambling? Whoops, now there's a news item that slipped by me. But aren't I still seeing lots of ads for online poker in men's mags?

Ricpic -- The value of ego gratification should never be underestimated!

NZ Conservative -- And the value of blowing off steam shouldn't be underestimated either. Does "blowing off steam" generally qualify as "utility" in the econ textbooks?

Tim, Alec -- It's going to be interesting, seeing how content-generatin' types sort out their professional and their give-it-away-free lives. And of course there are all those content-generatin' types in the blogosphere who make no efforts to synch up their blogging with their pro lives ...

Robert -- I love that "cover intellectual at the workplace" bit. Explains a lot. We've got more than a few where I work, I suspect.

Alec -- Your 40-hr-week notion deserves to be widely discussed. I think no economist, when directly asked, would say economics explains all of life. They aren't that gullible. Still, many of them *behave* as though they hold the key to all human behavior, no? There's something about grasping basic econ that leaves some people feeling not just informed and better-equipped, but like Supermen, ready to take on any question, even the largest and most mysterious. Not that such a quest can't produce some interesting material for the rest of us to chew on, of course ...

John -- I dunno. "Utility" is one those words that seems to stand in for whatever the economist needs it to mean at a given instant ... Could be my failure to understand, of course... But saying "people blog because they get something out of it," while semi-enlightening, isn't exactly an insight we need economists to tell us about, is it?

Posted by: Michael Blowhard on December 6, 2006 10:55 AM

some blogsites are almost magazines

I consider 2 Blowhards to be among them. It's really an online cultural/literary magazine rather than a blog per se.

Posted by: Peter on December 6, 2006 12:48 PM

A website that gets a huge amount of traffic can easily earn you a living, especially if it's targeted traffic.

The average blog has little traffic and it's not targetting to anything profitable.

But a non-targeted blog like Instatpundit can earn a living.

Or a targeted blog like Manolo the shoe blogger's blog can earn a living because it's targeted towards shoes, and "the Manolo" puts up all sorts shoe ads. Most of his posts are essentially advertisements.

Not as fun, perhaps, as writing whatever you feel like, but surely more fun than flipping hamburgers for a living.

Posted by: Half Sigma on December 6, 2006 3:42 PM

"Most of them aren't online diaries of the writers' personal experiences, which is how I define a blog."

Well, that's not how the rest of the world defines it.

http://www.answers.com/blog&r=67

"A website that displays in chronological order the postings by one or more individuals and usually has links to comments on specific postings."

http://en.wikipedia.org/wiki/Blog

"A blog is a website where entries are made in journal style and displayed in a reverse chronological order.

"Blogs often provide commentary or news on a particular subject, such as food, politics, or local news; some function as more personal online diaries. A typical blog combines text, images, and links to other blogs, web pages, and other media related to its topic. The ability for readers to leave comments in an interactive format is an important part of many blogs. Most blogs are primarily textual although some focus on photographs (photoblog), sketchblog, videos (vlog), or audio (podcasting), and are part of a wider network of social media."

"I don't consider those high-revenue blogs to be blogs at all. They are content providers, more akin to magazines."

They consider themselves to be blogs:

http://www.techcrunch.com/about-techcrunch/

"TechCrunch, founded on June 11, 2005, is a weblog dedicated to obsessively profiling and reviewing new Internet products and companies."

http://www.boingboing.net/2005/03/14/thanks_bloggies_bb_w.html

"Boing Boing pal Scott Beale informs us that our blog just won Group Weblog of the Year at the Bloggies. OMG! What a huge honor! Thank you, Bloggies."

http://gawker.com/news/about/the-gawker-faq-what-is-this-gawker-020062.php

"What is a blog, and how is it different from a regular news site?
The short answer: the new stuff is always at the top of the page! Also, we have no pretensions to objectivity -- no editorial board, no assigning editor, and no delays. We publish in real time. Weblogs are biased, personal, and funky."

http://www.dooce.com/archives/daily/10_17_2006.html

"Wife, mother, Utah blogger"

Fark is the only site mentioned in the article I quoted that doesn't claim to be a blog.

"Oh come on Peter, give in gracefully. You've had your initial assumption blown out of the water (and you doubled your bet by making it a personal attack on Ms. Passey). You got proven wrong multiple times.

"It's time to admit you were wrong *and* apologize to Ms. Passey for the unwarranted snipe."

Thank you. I agree that Peter owes me a retraction and an apology, both here and in all the other places that he's been making libelous remarks about me and my blog's income.

Posted by: Jacqueline on December 6, 2006 5:04 PM

Okay Jackie, I will admit that I was wrong about the blog-income issue, and I'm sorry for saying it. Fair enough?

Posted by: Peter on December 6, 2006 8:43 PM

Peter: It's sounds like you're just redefining "blog" to be something that will rarely ever earn someone a living to make your argument work. Just about everyone who posts for or comments on the various public blogs I read refers to them as "blogs", this even includes high traffic places attached to MSM websites like Political Animal. If your use of "blog" doesn't include places like this or Tim Worstall's or marginal revolution, etc., then it's a very non-standard usage.

Jacqueline is probably unusual in having a blog that is largely personal musings which has enough readership to generate real income, but the fact that she was dating a medium high-profile internet poker pro for a while and had lots of poker wannabes as readers to sign up with her affiliate code (which generates a continuing income stream, not just a per click payment) probably had a lot to do with her financial success (which I don't doubt).

She's a great example of someone who became a minor internet celebrity and found a way to exploit it financially. Obviously not on the scale of people who are MSM celebrities, but many mainstream celebrities generate a *lot* of income or interest from their similar personal blogs, without being anywhere near as interesting or as good a writer as JPP.

Which is not to say I'm Jackie's biggest fan. I don't even have her on my blogroll and read her only occasionally when someone I know links her. I've just run into a number of incredibly vapid celebrity blog which are somehow immmensely popular.

Posted by: Michael Sullivan on December 7, 2006 9:34 AM

Glen -- America has been outlawing online gambling? Whoops, now there's a news item that slipped by me. But aren't I still seeing lots of ads for online poker in men's mags?

It's not officially illegal in most intelligent readings of existing laws (except in some states), but the government has basically declared it to be (without actually legislating it properly), and announced the intention to do all sorts of shit to mess up people's ability to move money to offshore sites (on the grounds that it's a haven for terrorist funding), and a number of major online sites have stopped serving US customers. AFAIK, that includes every company that is traded publically in a country with extradition agreements with the US (UK). Private companies have mostly stayed in the market. My guess is that they all came to same reading which is that the law is clearly on their side, but that if they are publically traded, there are too many ways the government can legally mess with them anyway to be worth the risk.

Action in online poker has dropped *dramatically* since Party and others announced they were dropping the US.

Posted by: Michael Sullivan on December 7, 2006 9:42 AM

Thank you.

Posted by: Jacqueline on December 7, 2006 10:21 AM

If 150% of blogging is during work hours, then people must be un-blogging much of the rest of the time.

Posted by: Rich Rostrom on December 9, 2006 11:27 PM






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