by Dana Blankenhorn
  Volume VII, No. XXIII

This Week's Clue: The Coming Blogging Industry

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This Week's Clue: The Coming Blogging Industry
SSP (Shameless Self Promotion)
SP (Shameless Promotion)
The Permission Tree
Harping On China and India
The Truth Behind AOL-Microsoft Peace Treaty
Clued-in, Clueless

Dana Recommends The Blankenhorn Effect offers a powerful, positive message for our time. Once you understand how Moore's Law impacts every part of your life, how powerful it is, and how irresistible a force it truly is, you will have the power to predict the future and know how to change it. Buy it today, and make 2003 a better year for yourself, your business, and your family.


For the Week of June 9, 2003

A few weeks ago I described a business model for blogging. It's based on advertising, and the idea is that in order to get a price for their ad space bloggers must limit their ad space.

I proposed two simple ads per page. One ad would eventually draw a good cost-per-thousand rate, either as a horizontal or (better yet) vertical banner. The second ad would be a sponsorship "skin," with the color scheme and design of the blog's surround sold as a branding message to a national advertiser, by the day, the week or the month.

In studying the blogosphere I have also noticed an interesting new trend that will enable blogs to scale-up and gain the audiences they need to make all this work.

The Clue can be found in the Blogstreet "Top 100" list. There is a lot of noise in this list, but notice how many "community" sites are all on the list . Slashdot, Metafilter, and Plastic are all in the Top 20, not because any of their writers are Shakespeare (or even Dave Winer ) but because their communities churn out an enormous amount of content. You can always find something new on these sites and in some cases (like Slashdot) it's even defined by a "beat" - open source. By adding a simple skin to the current Slashdot banner, VA Linux can take the Clue I just gave and start making money today.

The rest of you, let's go further down that list. The Chronicle of Higher Education's Arts and Letters Daily is a publication that just happens to use the blogging format. Nearly 500 sites blogroll them. Define the site as you would a publication - advocating and organizing a market or lifestyle - and you can begin to transform this site into a profitable business.

Now, go deeper. See The Nation , see Common Dreams , see (especially) the National Review Online (NRO) . These publications are helping define the national political debate, because they each have several writers who write often. Go to these sites any day of the week and you will find something new. They all use the blogging metaphor (although the National Review doesn't yet use blogging software) to produce their content.

One way to see the power of these publishers, especially NRO, is at Technorati's Current Events page . Count how often the National Review is cited as a news source by conservative bloggers. That's the echo chamber effect of blogging at work, power completely out of proportion to effort.

Blogs can be powerful for journalism because they cut out two sets of middlemen. The first set are the technical middlemen - the printers, lay-out people and (more recently) Webmasters who must format and deliver the content as an HTML page for it to be seen. With blogging they disappear. The second set of middlemen are editors -- copy editors, section editors, executive editors - the people who check for libel, check for style, and hand out the assignments. What most people don't understand is that, with blogging, most of these people will disappear as well.

As a format for journalism, blogging delivers more content bang-for-the-buck than any other medium. When you have several bloggers, within a defined beat, sharing a blog, you could build a top-ranking blog very quickly at low cost.

Why should bloggers pool their efforts? First, pooling would bring in enough scale to justify the hiring of an ad salesman and a business manager - two key differences between a mere blog and a business. Second, the community sites offer a Clue that would let these professional bloggers retain their individuality even while sharing a site.

The Clue here is icons. Plastic and Slashdot use them a lot. Icons define the topic of a post. The larger Plastic icons have enough space to become authors' photos.

You place your icons on the left side of the page, and make each one (author or subject) a linked search. If I'm on one of these blogs, click on my smiling face and you'll get the Dana Blankenhorn page, with all my posts (most recent on top), a little brand identity (just like along with the banners and skins needed to keep the money train rolling. If this is a shared technology blog, click on an antenna for 802.11 coverage, a PC for PC coverage, a penguin for Linux coverage, etc. etc. You can scale this by having additional icons on the left side of these subject pages. Readers can bookmark these pages so that if they care most about, say, 802.11 coverage, they will get just 802.11 coverage - and imagine how valuable they might become to advertisers as a result. (You will also have pages devoted to writers, so my fans can bookmark me and find me at a click.)

If you use business discipline to earn real money, you can hire the best bloggers in any vertical market space to staff your blogging publication. If they make a mistake and you have to correct an entry, it's the work of a few moments, and libel liability is limited. (You still want to grade them on their avoidance of mistakes, but the paranoia of a newspaper editing desk should be limited by this.) This format - content and advertising - can scale. You could have publications based on geographic markets, on industry segments, on hobbies or interests.

This column also reveals a mistake otherwise clued-in people like Nick Denton make while trying to turn blogs into profit. He has gotten some traction from Gawker and its editor, Elizabeth Spiers. But she is just one person. Real scale requires a larger staff, and this format can deliver it. Sure, she can still lead, just as Anna Wintour leads at Vogue . But it's the staff that builds the publication, and it's the brand that builds the audience. Building a business on a single face is a foundation of sand. (Ask Martha Stewart Omnimedia if you don't believe me.)

This has been a long sermon so let's summarize. A single ad and a sponsorship skin get your page its price. A good staff, not a good soul, gets you the reliable audience. Blogging's power is that it removes gatekeepers of all kinds - a blogged publication can deliver cogent commentary on an event even faster than TV (which can only give you a talking head).

This is the future of journalism.


SSP (Shameless Self-Promotion)

I am no longer working at Mediapost . The work was great, I did it well, but I didn't like the bosses, and in the end the feeling was mutual.

We have a winner. "The Blankenhorn Effect" has won the Computer/Internet category in the 2003 Independent Publisher (IPPY) awards.

"Dana, it is GOOD," raves Pete duPont, lawyer, futurist and once a candidate for President. "This is some really powerful 'stuff.' I think you've got a winner," says Drew Kaplan of DAK Catalog fame. One result is I have begun working on a follow-up book, describing the future direction of technology, to be called "The World Of Always On." Buy "The Blankenhorn Effect" at Amazon.Com , or at least say nice things. You can use the ASIN number, 1553953673, and recommend it to readers of other, similar books. You can also save on shipping when you buy the book at Amazon, over the cost of buying it elsewhere.

If you can convince some more published reviewers to read "The Blankenhorn Effect" and recommend it to their readers, please send me a name and address. In exchange, you'll get the PDF version of my second book, The Blankenhorn Effect: Boom, Bust & Beyond. This is a collection of columns from, organized chronologically and by subject, with additional commentary from yours truly.

I have written recently for BtoB Boardroom and Mobile Radio Technology . You can follow the continuing story of "The Blankenhorn Effect" on my "Moore's Lore" blog . (Get my old ClickZ columns here

You have my permission to forward this newsletter widely. And if you have trouble subscribing let me know . Remember: it's journalism that keeps the Clues coming...


Shameless Promotion

Your list is your most important asset. But what happens when someone forgets who you are and you get on a "spam" blacklist? Your asset becomes worthless.

Need a-clue on how to avoid that? Get your list audited, and managed professionally, by the fine folks at Whitehat , part of the American Computer Group , a long-term leader in database services for direct marketers.

When your list is truly opt-in, not only do you become a white hat yourself, but your e-mails are read, even anticipated, by your audience. That means higher conversions and more money in your pocket.

If you're serious about Internet Commerce, you need Whitehat Interactive . Get it today.


Takes on the News

The Permission Tree

I was chatting with a friend about a client. The client is a financial service outfit that wants to go beyond its current niche (as all the big ones do).

I suggested a Permission Tree, and he asked what that was. I winged it, but I think I nailed it.

One of the big problems with the misreading of Seth Godin's "Permission Marketing" is the idea that "transaction permission" is the lowest kind of permission, and that there are only a few levels of permission, based on how you're doing business with someone.

If permission really is like a relationship (and it is) then there are many, many levels, and you need to approach each level differently.

For instance, what if someone has asked you to bid on a piece of business before, but you didn't get the deal? What if they have been on your site, and filled out your form, but haven't tried out your service? These people are not suspects. They're solid prospects, with some knowledge of what you offer.

Thus, the Permission Tree, which fills out the branches of Permission Marketing for the Internet Age. In the course of my advising this friend we climbed a few rungs of that ladder.

The lowest branch of the Permission Tree is an e-mail address. If you get someone's phone number, you have more permission. If you get their address, you have still more permission. But you may not yet have an order. Yet you may be much closer to an order than before. Your prospect is much more valuable. So why aren't you providing incentives, gifts, presents, and attention to this person, as you try and gain this information?

Depending on what you are selling, you may need even-more information than this to get transaction permission. But at some point in the process you will want to know about the elements of their lifestyle that relate to you. If you're selling consumer electronics, you might want to know if they have a TV, and if so how big it is. You might want to know about their stereo set-up, its connection to their TV, and their Internet habits. All this is very valuable.

But here's the point. You should be willing to pay for this information. You can pay for it with information - honest advice. You can pay for it with attention - a hand-written e-mail answering a hand-written question. You can pay for it with discounts, or you can pay for it with points.

Many e-merchants make the mistake of confusing their own e-mail newsletters with premiums of this type. They are not. They are advertising. You should pay your prospect to take them, even if they have valuable information in them. But, again, you don't have to pay with cash. You can pay with attention. Because someone who is actively reading your e-mails is a much better prospect than someone who just comes in off the street, or someone who merely accepts your e-mails stoically and doesn't call the spam police.

Now here's the pay-off. Your customer database must be able to map all these layers of permission and all your contacts with the customer. Your e-mail effort must be able to deliver a custom (or semi-custom) product to each prospect in the database, based on how much permission you have. And your sales efforts should be geared, always, to increasing the level of permission you have with each contact. You have permission to pitch one product line, get permission to pitch others. You have transaction permission, get permission to give regular offers, or try to get them to subscribe. (See how valuable that e-mail newsletter is now? It's subscription permission, one of the most valuable kinds.)

One more point. Audit everything. You audit your e-mail lists not to prove something to the government, but to prove something to your customer, that you care about them. Treat them as a lover and only then will they love you back.


Harping On China and India

One criticism of my blog is that I often harp on the competitive threat from China and India .

I do this for a simple reason. It's important, and no one else seems to be noticing just how important it is.

Consider that, between them, China and India have nearly 2.5 billion people, nearly half the world's population. Consider that, during the 1990s, Chinese and Indian engineers represented a hefty chunk of America's own engineering classes. Consider that China and India both take technology seriously - both now have policies in place that foster innovation and make technology professionals as comfortable as possible.

Now consider the cost advantages. Consider how much less money a Chinese or an Indian engineer makes as opposed to one in the U.S. (even a Chinese or Indian one). Consider how productive they are (I dealt with my last Earthlink DSL problem via an Indian chat), how friendly, how their English is often better than your English is.

Yes, China lacks the liberty we take for granted (but our government is busy taking much of it away). Yes, India lacks the safety we take for granted (but our gun laws are taking much of it away). Yes, Chinese and Indian exports run into trouble over politics (but the trouble we're getting increases by the week - ask Coca-Cola).

There is nothing God-given or guaranteed about America's economic power, on which its military power is based. It can be lost. It is being lost. It isn't even being fought for. The failure of the Bush Administration to protect and grow our technology base is, to me, the most damning indictment we can render against it.


The Truth Behind AOL-Microsoft Peace Treaty

The truth is that Microsoft can now engulf and devour its former rival.

Microsoft paid Time Warner $750 million to make AOL go away. Time Warner chief Richard Parsons has been systematically stripping AOL of its technology expertise for months, claiming its "great content" will now be the reason people buy it.

But everyone knows AOL won't meet Time Warner's profit goals (if they do, Time Warner will just move the goalposts). Instead, Time Warner will simply spin out AOL under Steve Case next summer, pull the exclusivity plug, then watch Case go down with the ship.

This is the way the game has always worked at Time Warner. It's not about money. It's about power. It's about Time Warner bureaucrats retaining their power, and playing their little reindeer games in their little New York offices. Ted Turner was engulfed and devoured in this way, and Steve Case is being engulfed and devoured this way.

Media power isolates media companies from the market that provides discipline. Their power transforms them into governments, where what happens inside is more important than what happens outside, in the real world. It is only continual media consolidation that allows this game to continue.

But the game won't go on forever. Moore's Law will give new voices, independent voices cheaper-and-cheaper ways of reaching that mass market. And big media, in the end, will be destroyed. Not tomorrow, or the next day, but in time it will be destroyed, transformed, and turned on its head.


Clued-in, Clueless

Clued-in is Greg Kostikyan, a major games personality who recently figured out how the flip side of Moore's Law is punishing that business . Good job Greg.

Clueless is California Attorney General Bill Lockyear, who sided with the movie industry (and against the much larger technology industry) in a dispute over the legality of DVD decryption software. California's economy is far more threatened by moves to stifle innovation through law than it is by movie piracy. Negotiations to end the copyright war must be with users, not with software companies.


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