There’s Gold In Them ‘Tubes, I Swear

Huffington Post and Digg are two Web 2.0 companies that have been valued north of $200 million. Now editors from BusinessWeek, AdAge and Gawker are looking at the books and saying, “not so fast.”
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According to Simon Dumenco, HuffPo collected just $302,000 in ad revenue last year. He says soberly that the company might be worth $2 mil. Dumenco also says HuffPo has “an ethically questionable content-generation scheme.” The man has no love for The Arianna.
Digg, an aggregator of content, is apparently spending twice as much cash as it makes. Putting it all in perspective, Owen Thomas delivers this clincher:

But it’s worth thinking about Digg’s numbers amidst the litany of complaints about the ink-on-newsprint business: newspapers coast to coast are seeing devastating declines in advertising revenue. The New York Times has mortgaged its headquarters. The Tribune Company has declared bankruptcy. And yet, even in their decline, newspapers remain prodigious generators of cash. This moribund industry generated $13.7 billion in profit in 2007.

It gives one reason to pause. As an adman, I have to say, damn, let’s improve the state of online advertising. As the editor and co-founder of an online media title, I have to say, damn, let’s improve the state of online advertising.
Who has some Alaska-sized ideas? Who can find the vein to fund the best online content? Whoever this mythical miner is, she’s going to make a lot of people happy and rich, not necessarily in that order.

About David Burn

Fired up to write it down. Co-founder and editor of AdPulp. Chief storyteller at Bonehook, a guide service and bait shop for brands.

  • http://adp ariana

    The problem is, the majority of digital content is free. And if you started charging now, you would quickly see the true extent of visitors’ love for you.
    Unfortunately, our initial attempts to generate revenue include old school thinking (i.e., placing advertising in a site à la newspaper ads or television commercials). I’d be interested in seeing figures for the effectiveness of Google ads.
    Don’t know what the solution is. As you say, the person who figures it out is the next billionaire. I’m pretty certain that charging people is not the answer. And the current advertising scheme is nonsense too.
    Perhaps there needs to be something more along the lines of rewards programs. For example, AdPulp visitors receive special, exclusive discounts for music downloads. Free porn would certainly spike interest. Seems like it would be easy to determine rewards programs suited to a site’s primary audience.
    Or maybe we just need to realize that the digital space is not a money-generating ad space. It’s really a place to help hype other initiatives. That is, Huffington makes little money with her online efforts. But the online efforts make her other efforts (book deals, media appearances, etc.) more attractive and profitable. It’s like the NBA. Players make a lot of money to play, but the best ones make more money via endorsements and ad deals.

  • http://adpulp.com David Burn

    I love the rewards program idea for AdPulp readers. It’s actually something we’ve been working on with Talent Zoo. In fact, you can use this code right now—ADPULP25—at http://talentzoo.com for 25% off the placement of a job listing or bundle of listings. The offer is good for a single purchase.
    We hope to bring more deals of this nature to life this year. This particular offer will soon be displayed on our home page and I’d like to thank Amy Hoover @TZ for making this possible.