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August 22, 2006

Business 2.0 says Michael Arrington is a partying kind of guy.

Arrington, a 36-year-old entrepreneur behind a long list of unrecognizable startups, has suddenly become one of the rising stars of Silicon Valley. Why? The answer lies in TechCrunch, Arrington's blog about new technologies and companies. In the year since he launched the site, he has amassed such a strong following that he's become a go-to person for VCs and tech execs looking to leak corporate tidbits or announce news.

More than 1.5 million readers regularly check out his site. But here's what gives Arrington real distinction: He's pulling in $60,000 in ad revenue every month. That's 10 times what the site was making earlier this year, which was when Arrington, convinced of the potentially monstrous riches ahead, quit his day job as president of a startup to blog full-time.

The monetization of blogging can trace its roots to late 2002, when Google (Charts) created a revolutionary system that allowed anyone with a website to run ads. The technology, called AdSense, matched ads with a site's content. Each time a visitor clicked on a linked ad, the site's owner got paid (a model now referred to as cost-per-click advertising). For the first time, anyone could be a real publisher with real advertisers, with no need for the big sales forces that magazines, newspapers, and other traditional media employ.

Don Dodge is less sanguine:

Blogs are like Open Source projects in that anyone can do them for free. There are literally tens of millions of blogs all available for free and produced by individuals with no investment. Why would you need $5M to write a blog when your investment is zero? What kind of return will VCs see from this investment?

Like Open Source, blogs will produce a few popular brand names that will attract 95% of all the attention and money. These blogs will attract advertisers and sponsorships. But, is there really enough upside to generate VC like returns? Perhaps in very rare cases, but it doesn't look like a very good sector bet.

Kevin Rose has the right attitude. Bullshit.

Of course Don Park and myself at DailyWireless are not crazy. We'd like DW to make money. We just haven't gotten around to it yet.


Originally posted by samc from Daily Wireless, remediated by yatta on Aug 22, 2006 at 04:51 PM