Economics of the Blogosphere

The Catalyst Code:

The blogosphere is one of the biggest and most influential global industries created in the last decade. Technorati tracks almost 100 million blogs and estimates that about 20 percent of blogs are active in the sense that they were updated in the last 90 days. Hundreds of millions of people globally either operate blogs or contribute to them over the course of the year. With 1.5 million new postings a day, blogging likely consumes billions of hours of effort globally. According to comScore, blogs accounted for slightly more than a third of the 173 billion US Internet visitors in May 2006. All told blogs have become a significant source of competition for all of the on and offline businesses that make their living attracting eyeballs and selling access to those eyeballs to advertisers. The blogosphere creates vast amounts of news and opinion. It is one the major destinations of the many readers fleeing newspapers.

Despite its size and importance the blogosphere earns little revenue. About 10 percent of blogs make money from advertising but few of those make enough to pay their operators the minimum wage. Of course some blogs now attract millions of visitors a year and earn their operators lavish compensation from the advertising they sell. PerezHilton.com, a highly popular entertainment blog, reportedly gets $9,000 a week per ad and it posts many ads on its web pages. But, by and large, this global industry does not seem to be based on the quest for profits. Most of its participants are volunteers. Like open source software it seems to defy the laws of market economics.

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