Blogonomics: Selling Wonkette

Wonkette has been sold, to its managing editor, Ken Layne. In the memo, Nick Denton explains that Gawker Media just wasn't very good at selling political ads. "Political advertisers are a strange breed; they don't come through the same agencies our sales people deal with," he writes, explaining that the New Wonkette "will become part of the Blogads network of political sites, which includes Daily Kos".

This doesn't mean that Wonkette is being sold to Blogads, just that Blogads will sell the advertising on the site. Makes sense. But then up pops Ken Layne in his own comments section to explain that Wonkette has done just that in the past:

Our new advertising partner is the same company that plastered this site with political ads back in the day.

So here's the question: if it's just a matter of Blogads being better at politically-oriented ad sales than Gawker Media's ad team, why not outsource ad sales to Blogads as happened in the past? Blogads ends up selling the advertising on Wonkette either way, but this way Denton loses 100% of the equity in the site as well, and gets very little in return: Peter Kafka says "he's more or less giving the sites away".

I'm sure that Wonkette is losing money right now; it may or may not become profitable with Blogads as an ad partner. In this election year, don't you think that Denton would want to find out before selling for a negligible sum?

Assuming that Denton's being smart, however - which is normally a reasonably safe assumption to make - this news is definitely a bad datapoint for anybody with dreams of becoming rich through blogging. Wonkette had 5.9 million pageviews and 1.5 million unique visitors in March: on the basis of the back-of-the-envelope calculations which have become increasingly commonplace in the blogosphere, it should have been worth an eight-figure sum. Instead, it seems to be worth almost nothing.

In order to make Wonkette profitable, Layne is likely to bring in a new equity partner, who will inject cash into the business (something Denton's often reluctant to do) and raise the site's visibility in Washington. If it works, there might be some serious money to be made. But if it doesn't, then the new owners will essentially be throwing bad money after good, trying to invest in a political website with only seven months left until the election's over and in the face of a looming advertising recession.

In any case, it's obvious from this sale that even sites with over 5 million pageviews a month don't simply make money automatically. Back when Denton launched the site in 2004, with original editor Ana Marie Cox, content was very cheap and competition was minimal. Ana's now a highly-paid star writer for a major national newsweekly, and editorial budgets across Gawker Media have been rising inexorably as blogs take their place as just another media outlet which compete for talent alongside newspapers, magazines, television, and radio. The Wonkette masthead now runs to three editors, a video producer, and three interns, on top of whatever staffing is necessary on the business and technology side of things.

Or, to put it another way: a few years ago, no one was making much money on blogs, but no one was losing much money on blogs either. Today, both outcomes are possible.

Update: Peter Kafka also mentioned that "an earnout clause could eventually give Denton a few more bucks if the sites do well". I somehow doubt, however, that Wonkette is going to end up remitting to Gawker Media anything approaching a seven-figure sum. Denton's ROI on Wonkette might conceivably end up being positive. But I very much doubt it will ever be anything to write home about.

Report Abuse

Archive

Categories

Links

Visit our partner sites

Condé Nast Digital

Subscribe to a magazine:

Visit our sister sites: