This deal is interesting and it does seem to add up for The New York Times Company, but how well does it add up for About.com microsite editors?

NYT paid 10x revenue for a purchase price of $410 million – so annual revenues of $41 million and average monthly revenues of $3.42 million.

There are 500 “blogs” or microsites on About.com – so average revenues of $82,000 annually per blog, or $6,833 per month.

Assuming the editor gets, say, 20 percent of gross revenues (and I’m totally guessing here), the average About.com microsite is earning for its editor about $1,367 per month or $16,400 per year. Apply taxes of roughly 40 percent and the take-home pay for the site editor is just under $10,000 annually.

This is not a great living. The U.S. government defines poverty level for the average family of four to be an annual income of $18,850 or less. So we can hope that the average About.com site editor has another source of income.

Applying the typical 80/20 rule we can assume that 20 percent of the microsites are doing quite a lot better than this and the rest are not even seeing this much.

And of course that top 20 percent are ripe for peeling away elsewhere -- especially if as you point out, John, About.com derives much of its traffic from search -- so it's not necessarily even a strong brand that would draw eyeballs on its own.

Therefore, the site editors could assume that they could do just as well or better by flying solo, doing their own search marketing and optimisation and keeping all of the revenues rather than sharing them with About.com. This is especially true if they have begun to attract an audience and a following of their own.

Even if the site editors don't optimise as efficiently as About.com, they'd be keeping the entire pot, so they could afford some inefficiency. Or they could start a subscription website and diversify away from a pure reliance on shared advertising revenues (disclosure: my company is in the subscription website business).

My calculations would change if About.com is more generous with its editors than I have assumed, but I doubt it can be substantially more generous. So I wonder how NYT will keep the independent talent it will rely upon to make About.com work?

Kind regards,
Evan Rudowski
SubHub Ltd.

• Posted by: Evan Rudowski
• February 21, 2005 5:09 AM

Good points JBAT.

>> Now the Times can sell a national auto advertiser
>> like GM both the main Times site, as well as
>> About's auto enthusiast sites. Would GM make a
>> small About buy without a Times' relationship?
>> Possibly, but unlikely.

Actually, About.com has GM level advertisers on their sites, so it's not "unlikely." Group buying across About.com and NYT creates more efficiency, and therefore make it "more likely" I think.

Evan's comment:

>> Assuming the editor gets, say, 20 percent of
>> gross revenues (and I’m totally guessing here),
>> the average About.com microsite is earning for
>> its editor about $1,367 per month or $16,400
>> per year. Apply taxes of roughly 40 percent and
>> the take-home pay for the site editor is just
>> under $10,000 annually.

Well, almost no one does their About.com gig full-time. In most cases the guides are folks who have other gigs--like consultants--who do the about.com gig so they gain credibility and have a bread and butter client. It is well known that there are a handful of guides who make over 2-3k a month.

John's question:
>> Would you rather have scores of microsites with
>> a combined revenue of $15 million, profits of
>> $3-5 million, and a double digit growth rate,
>> or a newspaper group with revenues of $50
>> million, profits of $5 million, but declining
>> growth?

Excellent question... the other plus with the smaller brands is that a "small" brand like www.HackADay.com, www.engadget.com, www.autoblog.com, www.luxist.com, www.boingboing.net, www.paidcontent.org, and others would make great print magazines, research reports, events, radio shows (podcasts!), books or TV shows.

MAKE is a print magazine that now has a blog... so why not take HackADay and go from blog to print? With the one dying newspaper what can you do with the brand?!

Posted some thoughts on about.com here:
http://calacanis.weblogsinc.com/entry/1234000617032345/

• Posted by: Jason
• February 21, 2005 6:51 AM

Jason said:

>> Well, almost no one does their About.com gig full-time.
>> In most cases the guides are folks who have other gigs--
>> like consultants--who do the about.com gig so they gain credibility
>> and have a bread and butter client. It is well known that
>> there are a handful of guides who make over 2-3k a month.

I guess the point is why some of these people even need day jobs. If they didn't have to share their revenues with About.com perhaps they would already be able to make a sufficient living on their own from web publishing.

I think the question is whether aggregators like About.com will even still be necessary for the best and brightest bloggers, as easy and effective self-publishing tools become more readily available.

A big media company buying a weblog aggregator does not seem revolutionary to me. Isn't that what big media companies have always been -- aggregators of talent whose strength depended in part on their control of the means of distribution?

People are talking about this transaction being part of "web 2.0," but in "web 3.0" -- as the means of distribution become increasingly available to individuals -- the aggregators aren't really so necessary any longer, are they?

Kind regards,
Evan Rudowski
SubHub Ltd.

• Posted by: Evan Rudowski
• February 21, 2005 7:35 AM

At my blog I was inspired by this deal to do some numbers based on blogads vs print ads. Assuming the online medium has you target audience then doing a blog ad is way way better value for money.

http://www.di2.nu/blog.htm?20050221b

• Posted by: Francis
• February 21, 2005 10:31 AM

John,

Your reasoning for The Times buying About.com seems sound as a purchase decision but is it the right business decision?

To paraphrase the Great Gretsky: I skate to where the puck will be, not where it is. But Big Media Companies are always skating to where the money is, not where it will be. And with talk of Web 2.0 and beyond, profit will be a moving target as it moves down the Long Tail, up the value chain or wherever.

Now this might not be such a problem for more nimble and web savvy companies, but we're talking about the Grey Lady here. And that is where I see the biggest challenge, how does a news culture support About.com?

I seen plenty of examples where the entrenched culture has killed innovation at media companies.

Do you think NYT has a way to make it work?

• Posted by: chris
• February 21, 2005 11:54 PM

I hope you don't mind if someone who has worked with and managed About.com Guides for almost 6 years weighs in here.

"I guess the point is why some of these people even need day jobs. If they didn't have to share their revenues with About.com perhaps they would already be able to make a sufficient living on their own from web publishing."

The About Guide position is meant to be a part-time pursuit. While it's true that some Guides have earned enough to quit their day jobs, that's not necessarily a good thing. For instance, we want our Pediatricians Guide to continue working as a pediatrician. That gives the site the credibility and perspective it wouldn't otherwise have.

"I think the question is whether aggregators like About.com will even still be necessary for the best and brightest bloggers, as easy and effective self-publishing tools become more readily available."

Yes, anyone can start a blog and learn search optimization. But it can take a very long time for a blog to attract the kind of audience needed to generate a decent income, if it ever does. On About.com, our tools and training and geared towards creating the most relevant, search optimized content on the Web. It may take a while for the topic to ramp up, but as long as the audience grows each month, the Guide is guaranteed to make at least $500 per month.

Perhaps an even better way to put this would be that 72% of our Guides have been live on About for 2 years or more, and 38% have been around for more than 5 years. You can't underestimate the amount you learn from being a part of a community like this. That's a big reason why About continues to thrive.

Best Regards,

Michael Daecher
SVP Content & Guide Operations
About.com

• Posted by: Michael Daecher
• February 22, 2005 7:33 AM

The folks at Paidcontent are tracking a recent trend. That is, major publishers inking deals with RSS reader firms. The trend is heating up as they report the UK's Guardian, our very own LA Times, CNET, and now major media publisher

• Posted by: Max
• October 20, 2006 6:51 AM

Never really liked about.com. Now when I know how much do they earn I like them even less.

• Posted by: Marcis
• January 8, 2008 1:11 PM

Yeah it hurts huh Marcis? good article BTW

• Posted by: Iphones
• February 29, 2008 1:07 AM