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Understanding Blogging Arbitrage

This guest post is by Kevin Muldoon of WordPress Mods.

As I used to run a few poker discussion forums and information websites, a large part of my income over the last several years has come from poker referral commissions. Commissions have dropped every month over the last few years, which is not a big shock since I sold my last gambling related site about five years ago. What was a big shock was the recent poker ban in the USA, resulting in thousands of dollars being taken away from me every month.

Strangely, this has not necessarily been a bad thing for me—quite the opposite. Having a constant stream of income every month for several years was great, though it did make me lazy in many respects. With these commissions gone from my monthly income, I have found myself really focused to get things done and get things done sooner.

The first thing on my agenda was to reduce outgoing costs. Sadly that meant letting two regular writers of my blog go (for the time being) until I can reassess where income can be improved. I enjoy writing so I don’t mind taking on extra writing responsibilities for my blog, though it did make me analyze my own duties more.

What is your time worth?

One of the biggest questions I had to ask myself when my income dropped was, “How much is my time worth?” If you make money from a number of different areas online (e.g. affiliate commissions, blogging, flipping websites and domains, etc.), this isn’t an easy thing to answer, particularly if your schedule changes from day to day.

If you are a blog owner and spend a lot of time writing articles for your own blog, there is a more suitable question to ask: “How much is my time worth as a blogger?” This is something I asked myself when thinking about the long-term posting strategy for my blog. Is some of my time better spent writing for other blogs and websites?

Consider a blog owner who writes one 1,000 word article for his blog every single day but unfortunately has no money to spend on writers. If he were able to find a good writer it would be in his interests to hire him if he was able to secure a writing job for himself at a much higher rate.

For example, if the blog owner got a blogging job that paid him $50 for every 1,000 word article, they would have the funds to hire a blogger at $25 per 1,000 word article. The blog owner would of course expect that the articles were of an equal or higher quality of his own. The outcome being another article being published on his blog plus $25 in profit from his own writing position.

In economics this is known as Arbitrage. Arbitrage is the concept of taking advantage of the difference in price between two markets. If someone can exploit this, their profit will be the difference in prices. Those who have dabbled in PPC marketing will be aware of this concept, as it’s used by many affiliate marketers to make money through Adsense. (In short, they bid low for certain keywords on PPC services and hope to make a profit when the user clicks on an Adsense advertisement which pays out more.)

Therefore, blogging arbitrage could be described as:

The difference in price between the rate you personally charge as a blogger and the rate you can pay to other bloggers to take over your writing responsibilities.

There are some things to bear in mind when applying this strategy:

  • You need to take a note of the time you are spending writing articles for others. Getting paid twice the rate you pay out is irrelevant if the articles are taking you three times as long to write.
  • A little time needs to be set aside when hiring writers for your blog, as it can be time consuming emailing them with advice and guidance, proof reading their posts, and then arranging payment.

Taking advantage of blogging arbitrage

I don’t believe that any blogger should spend more time blogging for others than on their own site. It’s important to have an input into your own blog and not let additional work slow your blog’s progress.

There are benefits of using blogging arbitrage, though. Not only is it an extra way of making money, it also helps promote your own blog. Most blogs have an author bio at the bottom of each article where some information about the author and a link to their website can be found. Therefore, writing for other blogs will bring you some extra money and traffic back to your blog.

The additional income is something that is vital for bloggers who are starting out and are looking for ways to increase their profits, so the benefits of using blogging arbitrage will decrease as your blog becomes more successful.

Nevertheless, I think that it is an important principle to understand. Have you ever used blogging arbitrage? Does it sound like a tactic that could help you make your blog more profitable?

Kevin Muldoon is a webmaster and blogger who lives in Central Scotland. His current project is WordPress Mods; a blog which focuses on WordPress Themes, Plugins, Tutorials, News and Modifications.

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Comments

  1. Well said Kevin.

    I totally agree with you that you need to ask yourself how much is your time worth? This will not only alert you if you are heading in the right direction and also force you to be get focus.

    If you have determine your strength, which is something else rather than writing, and will be able to bring in more money, you should definitely stick to it and let other people to do the writing task. So, to assess how much your time worth is really critical!

    Cheers,
    Ming

  2. Ross C. says:

    Writing sure does take awhile. Especially as a beginning blogger, there really are no results. No benefit, other than for yourself. Only when a blog “takes off” does an additional post mean maybe more income, traffic, etc. Guest posts are indeed a good way to take some of the stress off writing, have to find the right people though, people that know what they’re talking about and can do it well, and that takes time too. Nice read!

    Ross

  3. Rita says:

    Good points. I just started free-lance writing for other blogs, so the comment that bloggers should spend more time on their blog than writing for others is a good tip.

    Rita blogging at The Survive and Thrive Boomer Guide

  4. An interesting idea, for sure – but what if people come to the blog for your opinion? Isn’t hiring someone else to do the work for you going to hurt that some? Maybe even make you less valuable to those who want to hire you?

    • Yes. That’s a very important thing to take on board if writing for other blogs is reducing the time writing for your own. I guess it depends on your blog e.g. news type blogs wouldn’t be too affected by this but a blog which reviewed products would.

  5. Jeff says:

    I can completely relate to being lazy from having automatic income sources. I have several websites that are making me money day after day, month after month. I haven’t touched some of these websites for months (if it ain’t broke, don’t touch). I almost want all of my sites to get sandboxed or something just so I get my butt in gear again, lol.

  6. Blogging arbitrage, or arbitrage in general has worked very well for me over the years. After establishing my first profitable niche website, I was able to outsource the various steps involved from content creation, site establishment to marketing. This brought me exponential growth in the number of niche sites and income produced by each. I have sold a few niche sites along the way and kept the others over the years. I don’t think I could’ve reached where I am at today if it wasn’t for leveraging resources.

  7. How much is my time worth? For certain…how much I think my time is worth and how much my time ‘is’ worth, measured by income per unit of time invested, does not come close to parity. Maybe by employing a little strategic arbitrage I could close the gap a bit. Thanks for the goad.

  8. sokun says:

    Great post. I would say strike a balance between time on other sites and your own otherwise you’ll just be making profits for others.

  9. “I don’t believe that any blogger should spend more time blogging for others than on their own site.”

    Ha! If people do that, chances are I am not going to read their blog. I am convinced that by writing quality articles myself, the traffic will come to me, even if I do not post guest blogs. When that’s being said, some should be done.

    About the outsourcing part: I agree. You just have to be very concerned about the quality of the outsourced articles.

  10. Frank says:

    I second Alex’s sentiment, especially because blogging is so personal… even when dealing with technical information. When I’ve gotten to know a blogger more through his writing, I tend to slip into a mode where I sit back and enjoy the post – just taking my time and letting my guard down. On the other hand, there are tons of sites that offer excellent advice (and even things that I put into practice immediately)… but it’s a case of “hit and run” for me – I get in and out. I get what I need and I’m gone. I don’t stick around on the site or leave comments. I may find the post super useful, but I certainly don’t feel any social obligation or sense of community. I’m very selective about what sites I share with my friends, what I follow on Facebook, which feeds I subscribe to… and if I don’t feel that connection with the author of the blog then I know that a Google search will take me to posts that I need to read on any topic in the future.

  11. Billy says:

    I’d love to guest post but I just don’t know how to get started.

  12. Yingjie Hu says:

    I do not totally agree with your idea. The question whether your time is worthwhile to doing things is too subjective. For example, a lot of people think spending time in traveling is very excellent, but I think it is waste of time.

    In addition, you need to blog for a long time to decide whether it is worthwhile. Why? Perseverance. It is possible that you do not write enough posts to make google collect. It is likely that if you write another 100 posts, there will be a boost in number of visitors.

    Your method sometimes need consideration. However, I still do not know how to deal with the time mangement. This is a topic I need to research.

  13. Himanshu says:

    a new term for me. well explained, will be considering it for sure. The concern is why not put that well written article on your blog than any others. If at the end of the day I want my blog to succeed than the one for whom I am writing

  14. Tom says:

    Good post, Kevin. It seems like we’re trying to beat the efficiency of the free market here, though. If we have a writer who writes just as good as you do, but he only gets paid 1/2 of what his writing is worth, then I would assume that the writer would eventually move on to the $50 per article job and leave your blog behind.

    If his articles are really only worth $25, then they are probably not as good as the $50 articles you are writing, which makes me wonder: Do you want the quality articles on the blog you own, or the blog that somebody else owns.

    Also, I think it’s hard to know that you are only getting paid $25 per article. What if your blog becomes really popular in the next few years and all of your old articles that you had thought only made you $25 all of the sudden are bringing in much more than that. When you get paid $50 for an article that you write for someone else, it’s impossible for you to make any more money with that article. However, if you write it for yourself, that article will pay dividends years down the road.

    Just my two cents. Thanks for applying arbitrage to the blogging world, I hadn’t given it much thought before this.

    • From my experience, the rate someone is paid does not always reflect the quality of their work. I’ve paid more for so called A+ bloggers who produced boring, uninspiring articles for me and whereas some on cheaper rates went above and beyond every time. Not all good writers move onto bigger and better things and many have full time jobs and prefer to just write a few articles here and there.

      I agree that articles will bring in revenue in the future rather than just now, though this whole principle is based on the fact that the number of posts on your website is not reduced. :)

      I do stress that there are pros and cons to using this. It’s more applicable to those whose blog is not yet making enough money for them.

  15. I think it is so important to diversify your income – if that means writing for other blogs, do it. If it means writing for multiple blogs of your own, do that. Just don’t get stuck on one thing to dominate your income, or else you could be hurt if something changes – like online poker being banned.

  16. Justin Dupre says:

    Well said. I’ts also a mater of deciding what can provide you with the most benefit.

  17. That’s hitting the nail down on the head. I’ve been into blogging for quite a while now and have proven that it’s always best to weigh things first and choosing the option that gives us the win-win solution.

  18. PanelPeople says:

    This assumes that people blog just to make money. A lot of people just enjoy blogging and aren’t looking to make big bucks.