Jeremy just emailed me a link to an interesting article by Om Malik at Business 2.0 exploring some of the recent sales of web publishers. Of particular interest to me is the analysis of what the acquisition price was on a per user of the sites sold (I’m presuming that it’s daily users/visitors – although I can’t see ‘user’ defined in the article). update: Jon tells us in comments below that he’s confirmed that these figures are monthly unique users.
They have an interesting table which present’s these figures. The last six sales in the list give (the full list goes back to 1999) acquisition prices per user as follows:
- MarketWatch – $80
- About.com – $22
- Ask Jeeves – $44
- MySpace – $36
- Weblogs Inc. – $10
The average of these prices is $38 which later in the article they use to ‘value’ some other publishers including Slashdot’s owners, Gawker Media and Boing Boing.
While the $38 per user figure will probably be argued and it’s not really valid to apply it across the board like this (looking at my blogs I know for sure that different types of traffic to different sites generates vastly different amounts of income) – I thought it was an interesting way to look at things. I’m not taking the figure to seriously – but lets have some fun with it and play a ‘hypothetical game’:
The questions that come to mind when you see the $38 per visitor figure are:
‘how much is your blog worth?’ if you were to value it at $38 per unique visitor on a daily basis and ‘would you sell it for this figure?’
Here are my answers…
ProBlogger would be worth $110,238. Would I sell it? It’d be a tough decision. The site doesn’t make me that much directly from advertising revenue but it’s valuable to me in other ways – probably beyond a $110,238 figure. update: with these being Monthly figures and not daily I’d definately have to reconsider this as it’d take it over 3.3million.
My total collection of blogs (not including b5media’s) average about 30,000 – 40,000 unique visitors per day (depends upon how much news is going around) which if we took it at a 35k figure would make them worth $1,359,389. update: Once again – I with the figures being monthly this would value my blogs at over $40million – I think it’s a pretty safe bet that I’d be selling :-)
Once again as I ask myself the question of whether I’d sell or not I’d be in two minds. While that kind of money would of course be tempting I’d also have to consider numerous other factors including the revenue those sites currently bring as well as their projected growth. Again I’m not sure I’d accept that kind of offer.
What are your blogs worth using the $38 figure? Would you sell?
The print version says monthly… that changes a few things.
If it’s daily then I’d be worth around $45,600 Aussie bucks – and i’d take it before they reconsidered. I’d then start a new blog about Alfa Romeos, though I’d keep driving Saabs.
This whole Idea of what is a user worth makes me think we are really back in a bubble-era.
If it’s daily, I’m worth $265K. I recently had my first acquisition offer in the five figures range, but aren’t looking to sell and it frankly wasn’t very enticing. Anyway, it’s fun to think about and good to know you’re “sitting” on such a valuable asset. Seven years of slow but persistent progress has taken me to a place I never thought I’d be! As Darren has said, success doesn’t happen overnight, but it pays off to those who are patient.
Jon – yeah – if its monthly then that would definately make things VERY interesting!
multiply those figures above by 30 days in a month and I think I’d be reconsidering :-)
For $30,400 ? In a heartbeat ! Maybe even a little less.
I pinged Om about it as well, it’s definitely monthly. Maybe they will update the online chart. Sign me up, anywhere on the $10-35 scale!
Well now…at monthly that makes me a $912,000 richer !
Anybody got a Jag for sale, I’ll be needing one..or two !
Mike: Since I just “made” you $900K, how about a percentage? :P
Nice – we’re all rich….in our dreams.
Doesn’t all of this remind everyone of the 1st tech bubble? The only difference back then was that pageviews were overvalued ($50+ CPM).
I guess we switched up the metric (from pageviews to visitors) for bubble 2.0.
I would sell.
They would only be getting the site. I would start a new one the next day, without me there is no more blog. Sure, someone else could take over, but the visitors would just come to my new site once the word was out. So all I would really be selling is the name and old content.
Something that needs to be taken into account with your valuation is the value of what the owner puts into the blog. I’d guess that problogger isn’t worth as much without Darren doing the writing, where as his camera blog wouldn’t suffer as much with someone else doing the writing.
In the late 90’s I ran a free web hosting service similar to Geocities using an over the counter perl application. There was a whole bunch of us using the same script, and back then we used to have exactly the same conversations in the forums we frequented.
Out of all of us, i recall only one of us making it big. 50Megs.com sold for $9 Million, equating to $50 per user. We all excitedly calculated our net worth and were totally caught up in the euphoria. Then one day, CRASH, that was the end of that.
My best advice would be to take these figures with a pinch of salt, and that while its easy to calculate a per user price, its only really worth something if the sale is strategically viable, either by monopolising a certain niche or attaining critical mass.
By those numbers ($38 per monthly visitor) my personal weblog is worth $2.5 million. Some of my other sites are apparently worth the gross national product of a small country. I’d sell any of them at the drop of a hat if the estimate was correct. But it isn’t.
I responded about those numbers on Om Malik’s site, but I think Wolfgang Pauli said it best: “This isn’t right. It isn’t even wrong.”
Once again, those numbers are wrong, wrong, wrong, hopelessly, ridiculously wrong. Don’t take them with a pinch of salt, take them with several metric tons of salt. Then read Calacanis’s response and then take one more pinch of salt.
All of the acquisitions in that list were companies buying companies with revenue and growth, not mere sites with traffic. And most of them were overpriced, but that’s another story.
I know we’re just having fun here, but Business 2.0 seems to take this idea seriously. Now if you’ll excuse me I have a strange craving for salt.
Now that my memory has been jogged, Business 2.0 played a big part in the Internet bubble hype before the crash in 2000. I used to buy the print mag for inspiration and hope back then, having been sold on the idea that eye balls were worth dollars and page views were the only indication of a sites net worth.
Michael Moncur’s point about acquisitions is generally true- acquisitions tend to be overpriced. That said, I’m not sure we are in the bubble phase of blogs yet as advertisiers are just discovering blogs.
Expressed another way, I think the available advertising dollars has just begun and the advertising models we have may be their infancy. I haven’t thought enough about the $38 number- but remember that takes into consideration the present revenue and discounted value of the future. As Darren says, some blog content is worth much more than others.
As some have said, the blog author is important for some blogs and I would want the author on board for six months or a year-through a contract- before purchasing. Otherwise it is just a domain, a title, and an archive.
My two main sites fluctuate between 5k and 12k uniques a day. And they have done that in four months so I am pretty confident that they will hit a collective 20k uniques per day this time next year.
Fun as it is to contemplate $38.00/u/ day or 300,000 times call it $40.00 for a monthly value of 12 million, I look at my revenue numbers and know two things. First, I’d be insane not to sell at that price. Second, just not quite as crazy as the person willing to buy.
A more realistic mental evaluation is this – lets say you make $1000.00 per month from your blog. At current interest rates – say 3% – how much money would you have to have in the bank to equal that return? Call it $400,000.00 and you would be about right.
Now, do the same equation but demand that the value of the equity and the amount you make double every six months….there are no bank accounts which do that. Google shares have done the first part in the last year; but with no income to the shareholders.
Plus, and here is the key part, other than your time, what else have you invested? Most blogs are started with an investment of, well, zero. Which means ROI is effectively infinite.
Last, if you take a look at your time, and you want to have a little fun, along with the $ per month/hours add the month over month increase in equity. On the two blogs I am writing about I have seen a theoretical $100,000 a month increase in my equity on my more conservative projections. My paper per hour earnings, as these blogs take me an hour a day, are staggering….Now if I could just find a buyer.
Wow, I see my site as worthless and something to mess around on. Using this estimate, I would be worth around $12k. Some one would have to be crazy to even think about buying it for that much. Heh, I would take $200 and just start working on something else. I always have tons of other projects I wish I had the time for.
Does that mean that now the Technorati based valuations are defunct? Damm. It was informing to read how much people’s blogs where worth based on inbound links. At least now we’ve got a real high quality scale to measure the value of blogs. Oh wait but won’t one blog’s vistors be worth more on a per user basis than anothers? Of course it will but it’s a great little topic to get everyone excited so they get commenting and linking so lets post it anyway. Why anyone would link to this BS for any other reason is beyond me.
Good comment Michael – you’re right. These numbers are so silly to apply to any blog/site randomly.
The best advice I’ve heard recently was Jason C who said don’t build a web asset up to sell/flip – instead build a income stream. I think this applies here.
Don’t make your primary goal to get to XXXXXX visitors per day or month – this guarantees nothing in terms of a sale. What people buying up websites are looking for is revenue streams and sites with traffic that can convert into sales, ad revenue or some other benefit (usually with a $ bottom line).
Still – it’s fun to dream.
Jason C has also posted on this – along the lines of my last comment here.
I know a lot of people may not agree with me about this not being a bubble and that the price we are seeing today is just an iceberg to the price and aquasiation that we will see in the next couple of months.
what most be notted here is that we have the mainstream so to say and the advertiser focusing on the medium at the moment and that mean a lot of cash flowing into blogs. As such blogosphere will be experencing a dramatic upturn in value. I can bet on this. how much my blog network is worth is a factor of this and is certainly way above weblogincs.
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In many “buyout” situations, there are often non-competition clauses, and an extensive handover period.
A one-man business is worth nothing compared to a large network that would be sustainable even with it’s head chopped off.
The sum is worth much more than it’s individual parts, and allows for much greater long-term leverage.
The netwroks being picked up are in no way micro-managed, they could each through organic growth double in size each year.
I doubt most blogs if sold would realize more than 6 months revenue.
The terminology used in the article is about being paid by eyeballers….
I’d prefer it if it was $38 per users eyeball….easy way to double the money :-)
I’d take the $824,600 and put it all on black. Or red. No wait black.
$38 a visitor is a VERY liberal estimate, especially for a blog, as a few other commenters have noted. My 11-month old blog, by this estimate would be worth $24,282. However, in the 11 months that I’ve had the blog, I’ve only made maybe $40 total off of it. Granted, I just optimized the placement of my adsense ads a few weeks ago, but even since then I’ve had only 3 actual clicks, for a grand total of $0.14. Every few months I can buy a book or a cd with my Amazon commission.
The point is: there’s no way I’d pay anything near $24,282 for my blog. Would I sell it for that much? Probably not. I mean it’s my personal blog, it’d be pretty useless without me.
That figure seems absolutely ridiculous to me. If $38 per visitor is the current going rate for the industry, I think we ALL ought to hop on the blog bandwagon.
Clearly, this estimate doesn’t apply to your typical blog, and as far as I’m concerned, using Chitika and AdSense qualify as fairly cushy deals. I mean, who starts a SINGLE blog and expects to break the bank?
Finally all business moves around dollers. The definite plan to give value to visitors and create valur inturn is important. Think of proper monetisation mechanism without disturbing the value addition system created for your users.
Hey, I just wanted to let you know that I blogged about this over at another blog that I write for, located at http:/zoints.blogspot.com
I’m sorry if this seems like comment spam, but I just wanted to let you know since blogspot doesn’t support trackbacks. :)
Here’s the url of the article: http://zoints.blogspot.com/2005/11/website-buyouts-put-price-of-average.html
What we’re all talking about here is, to an economist, the “willing to pay” price. Ie what the buyer is prepared to fork out. The other side of the coin is called the “willing to accept” price (the seller’s reserve). These two have to overlap if a transaction is to occur. It’s a general fact that people’s WTA is larger than their WTP (known as the endowment effect). It’s probably true of blogs too.
As it happens, there’s only one person I’ve heard of who has quantified their willing to accept price – and you read it here last week!
Cheers,
-Greg.
[…] Update 2: Darren Rowse of ProBlogger ponders what this really means. Of particular interest to me is the analysis of what the acquisition price was on a per user of the sites sold (I�m presuming that it�s daily users/visitors – although I can�t see �user� defined in the article). […]
My blog is easily worth 2 million
mine bites..ugh
The figures are hype they are not in line with the true acquisition of a business model at all. For sure Google has purchased startups which have not made a dime but in a traditional since and good rule of thumb you simply take the gross revenue and multiply by a factor of 10. Of line this is the same basic method I use to purchase failing businesses or profitable opportunities. For example: A local pizza shop posted a gross income of $127,000 last year. The business had no real assets other then its equipment. I purchased it for $825,000.00 in less then four months I have increased the business income five fold. Two months ago I bought a online tool shop which sells USA made tools the online business had a blogg and a store and I bought it for very little because the owner had not created any income at all. I bought it for $5,000 and last month I made $4k.
In closing may I call your attention to the value of our US dollar? Please note the devaluation is caused in part due the International Monetary Fund which stated early this year their intent to devalue the dollar by 20%. Please note the Federal Reserve is not federally owned by privately owned by a group of small investors or “Money Families” Please take the time to learn the truth about our dollar and call your congressman and senate to demand an end to the federal reserve.
If you review history you will note we never had to worry about inflation but when the Federal Reserve started to suck our dollar and devalue the value we have had inflation, depression, hyper inflation, etc. The very issues the fed is supposed to protect our economy from.