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.”
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.
