Mark Penn, chief strategist of the Clinton Campaign, sparked an uproar in the blogosphere last week when he asserted the following in the pages of the Wall Street Journal:
In America today, there are almost as many people making their living as bloggers as there are lawyers. Already more Americans are making their primary income from posting their opinions than Americans working as computer programmers or firefighters.
The best studies we can find say we are a nation of over 20 million bloggers, with 1.7 million profiting from the work, and 452,000 of those using blogging as their primary source of income. That’s almost 2 million Americans getting paid by the word, the post, or the click — whether on their site or someone else’s.
Startling statistics, but misleading.
Penn has drawn widespread criticism for, among other things, his conflation in the piece of median and average incomes claimed by bloggers and for using conflicting sources.
Importantly, one of the surveys he references – Technorati’s 2008 State of the Blogosphere – makes clear that the reality facing bloggers who are in it for the money (as opposed to, you know, the everlasting fame and adulation) is less rosy than that painted by Penn.
Emphasis ours:
The average annual blogger revenue is more than $6,000. However, this is skewed by the top 1% of bloggers who earn $200k+.
Among active bloggers that we surveyed, the average income was $75,000 for those who had 100,000 or more unique visitors per month (some of whom had more than one million visitors each month). The median annual income for this group is significantly lower — $22,000.
Moreover, US bloggers – the group to which Penn was referring – earn an average of $5,000 annually. But the median revenue for US bloggers is a paltry $200. Since these bloggers invest around $50 annually in their blogs, according to Technorati, US bloggers’ median annual profit is only $150.
Not quite enough to make a living, then.
And while there may indeed be that handful of bloggers whose sites attract more page views than the offerings of many a mainstream news organisation (which are themselves aggressively hiring professional bloggers), even top financial bloggers like Paul Kedrosky and Barry Ritholtz supplement their blogging incomes with “real” jobs.
Ritholtz describes himself as “Chief Market Strategist for an institutional research firm, and the Chief Economics Commentator for an asset management firm. Dr Kedrosky, between appearances on CNBC and the conference circuit, manages to find time to advise various companies, institutional investors and VCs and to implement a quant-based investment strategy.
Over at Reuters, professional blogger Felix Salmon comments on another trend sweeping the blogosphere:the hot new route for anybody who wants to make enough-to-live-on money from their blog is to do so by trying to turn it into a book, rather than by selling advertising on the blog itself. It’s taken a while, but everybody from Christian Lander to Barry Ritholtz is bookifying, these days, with no little successSome bloggers opt for hybrid free and subscription models, while some – like John Jansen of Across the Curve – are considering “donations” as an alternative to a subscription-only model (this latter is something many news organisations find compelling, even if none of them have yet managed to implement it).
Michelle Leder of footnoted.org is a good example of a “diversified” blogger. In addition to the main (and free) Footnoted site, Leder offers a subscription-only “pro” service which attracts hedge fund managers and investors willing to pay $1000 a year for her forensic dissection of SEC filings.Hedge funds use the service because, Leder says,
There’s actionable information in SEC filings, and what are your options to find that information? You can do it yourself, or you can hire someone do it for you, which might cost you a bare minimum of $100k a year.
(As of May 1, the cost of FootnotedPro will more than double to $2,500, but Leder contends that “even at $2500 it’s significantly cheaper than it really should be”.)
Leder is also about to launch a new (subscriber only) partnership with Research Edge, a “leading real-time research firm”. As she put it,
For the past five years, I’ve been digging through SEC filings and I’ve learned a lot about the difference between something that’s newsy and something that’s actionable. As I’ve worked to build the site and its reputation, much of the content on footnoted.org over the past 5 years has focused on the former. Today, I’m excited to announce something that will focus on the latter: taking the more actionable information found in SEC filings and pairing it with some cutting edge research and technology by partnering with Research Edge.
These innovations were essential, Leder says, because revenue from advertising has generally not been sufficient to earn a living:
It’s clear to me that advertising is not working, not for a site like mine and not in this economy
But Footnoted has also provided a platform for Leder – who once worked at a newspaper – to focus to become a freelance expert on “the stuff that’s buried in SEC filings,” and to garner column writing and speaking opportunities. Call it, if you will, the “blog as loss leader” mechanism.
Even so, Leder notes:
[I] definitely think the future is more on the research/subscription model and actually trying to move further away from traditional freelancing
Because whatever Mark Penn might insist to the contrary, mere blogging is no “safety net”. And it certainly won’t pay the bills.
Related links:
Blogonomics – The Seeking Alpha model- Seeking Alpha
“it’s not uncommon to meet people who work 30-50% of the time for free, especially among the bloggers“ – Gaping Void (2007)
“I don’t know what my salary is” – Wired
The economics of blogs – Mark Evans (2005)
From Bricks to Pajamas: The Law and Economics of Amateur Journalism – Larry E. Ribstein / SSRN