The Economics of Blogging: Minimal Cost and Maximum Benefits

San Francisco Gate recently published a story which profiles several profitable blogs like GigaOM, Popsugar and TechCrunch. Founded by Michael Arrington, Techcrunch earns $240K a month on advertising alone, while pulling in extra income from conferences and parties.

It seems traditional media is still enraptured by the growing influence of blogs. Not long ago, Business Week had a similar article on popular blogs and their monthly income.

The profitability of blogs has become yet another way to validate their existence, as it elevates blogs from a simple past-time into a worthy business venture.

Newspapers and journalists like to focus on the players at the top of the food chain because the achievable dream is always attractive. Who wouldn’t want to make a full time income writing a few blog posts everyday from home?

The monetary benefits of professional blogging continues to fascinate many, particularly entrepreneurs who recognize the economic advantages of blogs:

An increasing number of blogs are bringing in cash faster than they’re
spending it after only a few years of existence. That’s in sharp contrast with the dot-coms of several years ago, many of which lived off the proceeds of stock offerings and never succeeded in generating significant sales.

The economics of blogging is so strong that entrepreneurs often can self-finance, which lets them tell potential investors to take a hike. TechCrunch’s Arrington said he’s walked away from venture capital deals four separate times.

Blogs have a Simple, Low Cost and Direct Revenue Business Model

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Blogs are a low-cost venture. Most of the time, you only need to pay for a domain name, an internet connection and web hosting. The barrier of entry is even lower if you choose to blog through networks or host your blog on an free blog service.

It’s infinitely scalable as well. You can adopt easily to growth because everything is a factor you can control. More traffic than you can handle? Allocate revenue towards hosting costs. Want to cover more news? Blog more often, recruit guest bloggers or hire staff writers you can trust. Techcrunch has a full-time staff of eight, although Arrington really started it alone as a hobby.

Profit just depends on one simple and all encompassing factor: Traffic. The more people visit your website, the higher you can price your ads and the easier you can generate income from other means. This is a direct revenue model; You don’t have to sell any auxiliary products or services, although you certainly can if you want to.

In a sense, blogs are created to fill informational market gaps left open by traditional media. Bloggers have specialized knowledge and their niche focus can provide alternative commentary to fulfill specific user needs.

And how does this bring in the money? Internet marketers often create blogs and adopt loss-leader strategies by offering content or services for free in order to constantly acquire readers they can convert for their paid business models.

Others like Techcrunch, leverage their reach and acquired audience by organizing lucrative conferences and branching out with a network of smaller blogs. There are many other ways. Blogs are just starting points.

Why You Should Start a Blog Even if You Don’t Want to Make Money from it

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Let’s talk about why you should consider starting blogs even if you don’t intend to generate any direct income from it. This is something that is not often examined.

In your daily life, you are categorized and sized up according to your clothing, the way you talk and many other visible factors. Your physical form, personal creed and your projected personality is the platform which you stand upon as you mingle or associate with others with similar or divergent views.

In the online world, the individual has no physical form or detectable personality unless he or she demonstrates it. A website that is attached to your name is your home base. It is the platform which easily fleshes out your virtual self. It allows you to develop a recognizable style, personality and form.

You can now be categorized, understood and appreciated. Blogs and profiles in social networking sites achieve this aim. They create an online identity, a home base from which you launch off in order to build relationships with others on the web.

If you are truly interested in making a living online, networking with others improves your chances for success. Having a blog makes it so much easier to develop familiarity and build relationships, to let people know where you’re coming from.

Somewhere down the line you might develop a remarkable idea and will need the support of others to make it a reality. These relationships you’ve built will come into play and will contribute to your future profitability.

Blogging is a Foundational Discipline for Income Development

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If a newbie asked me what how should start on the path to making money online, I would no doubt recommend that he or she start a blog on their own domain.

In my opinion, blogs are gateway websites which provide one with steady foundational skills on generating income from the web.

The process of starting up and growing a blog leads one to develop basic webmaster and online business skills. An entry-level blogger has to manage everything to do with his or her blog. They are forced to learn what is necessary for success.

For example, managing and setting up a blog will:

1. Encourage you to network online with others




2. Give you basic and advanced server management skills




3. Help you develop basic writing skills and a personal style




4. Teach you about personal and entity branding




5. Allow you to learn about monetization options and the selling of ad space




6. Teach you how to build links and make your website search engine friendly




7. Improve your marketing skills on multiple platforms

After you’ve developed these skills to an advanced level, setting up and managing non blog businesses or websites will not be difficult at all. You can then expand according to your skill levels.

If I’m interested in a niche or a particular field, I’ll usually start a simple blog to test the waters and examine the competition. Many times, what started as a mere hobby blog turned into something else as I learned more and more about the field.

Dosh Dosh itself is an example of a blog that I initially started just to record my casual experiences with various money-making programs. It was never purely created as a site to make money.

Now my readership is larger than I ever imagined possible.

Everything starts somewhere. Explore your interests. Create blogs you would enjoy if you were a reader. Who knows, they might just make some money in the end.

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