Cesar Brea’s Weblog

We’re in the middle of a blogging bubble, or at least it feels that way if you spend any time at all in the Blogosphere.  So, many people are asking, “Is there a business here?”  This note suggests some ways of thinking about this.

We’re in the middle of a blogging bubble, or at least it feels that way if you spend any time at all in the Blogosphere.  So, many people are asking, “Is there a business here?”  This note suggests some ways of thinking about this.

Here are some numbers.

First, according to the Pew Research Center’s most recent survey,  over 2 million Americans are reading blogs today, and just under 1 million are authoring them.  As many people read blogs as bid at eBay, and they outnumber those (that will admit to) visiting adult sites.

Blogging is pretty new, but it feels like we’re in the steep part of an adoption curve.  So let’s say those numbers double in the next year and we’ve got ~2 million bloggers out there.

Let’s assume 1/3 blog for free through some service, 1/3 pay a modest fee (~$5/ month at Typepad’s lowest rate) for something snazzier, and the balance blog on organizationally-sponsored blog software at the rate of ~100 bloggers per installation, with each installation costing ~$1k in software license fees/ year (more or less what Manila runs).

So that’s ~1 million bloggers at $60/year, or ~$60 million, plus another million — divided by a hundred per installation — across 10k sites, at 1k a year each, for another $10 million.  Let’s be generous and round up to $100 million, and then globalize things and double it.  So we’re looking at a $200 million/ year market.

This is of course modest by today’s VC standards, which may explain why none have stepped in.  Notwithstanding, Joi Ito and the other  Six Apart investors, and Ross Mayfield’s and Dave Winer’s angels, if any, will doubtless make money because they will build $20m+/ year firms worth 2x+ sales, if and when they sell.  Of course, arguably blogs are ultimately a feature of broader portals, and ISP’s and others will likely offer blogs as part of the basic personal or small business package soon. 

I’m sure this is a pretty narrow way of thinking about things. So let’s come at it from a different angle.  Today, cheap publishing tools (whether blogs, Frontpage, or plain old Notepad+HTML+FTP) have produced an ocean of content on the Web.  Finding what you want and staying engaged with it is still hard.  Search is still primitive: by keyword, occasionally with Boolean connectors.

Now enter RSS.  RSS — and for that matter any other standard for web services that becomes sufficiently popular — could be the basis for “structured” search, that could (will) complement the simple keyword-based search we see today.  With structured search, the entire Web (or at least nodes that publish according to whatever standard emerges for the item being searched for) becomes a database that can be queried in the powerful way we’ve become used to.  Think Froogle, only cleaned up and useful.  So useful in fact, Microsoft is onto it too of course (thanks to my friend Perry Hewitt for forwarding this news).

RSS is an open standard, so it’s free.  But extensions to it don’t need to be, and shouldn’t always be.  Examples of ones that should be include events, as described here before.  But examples of ones that might not be include pricing information.  We can envision a firm that might write such an extension, and then license associated plug-ins to publishers and readers.  This new intermediary could end up being to eBay what NASDAQ has been to the NYSE (a peer-to-peer market vs. a hub-and-spoke one).  Such a firm might not make much money on the plug-ins, because it would certainly want to see them widely deployed.  But it might make money in the information it builds from watching activity across the network of publishers, and possibly from looking at the pollers as well (as in patterns among requesting IP’s, less useful when you’re coming from AOL, but more useful when your request is coming in from XYZ.com).  And the business might not stop with the simple sale of information about this activity, or even value-added analysis of it.  If you can envision people placing bets against possible implications, you have the makings of a financial market, with transaction costs (though I guess eBay still wins because people might use Paypal).  Think “RSS futures”.

(To a certain extent this all feels like a re-hash of the hype around web services of just two years ago, with everyone talking about how much money there might be to be made in such things as UDDI directories and such.  And of course most public exchanges — eBay the prominent exception — failed to generate much liquidity, and  it’s been the private exchanges that streamline supply chains that have ultimately proven to be most economically viable.  But I’m sure there’s lessons from those experiences that could inform the new kind of models I’m speculating on here.)

Andy Roberts just posted on his idea of the Delta Web, which we knocked around at dinner the other night.  Read it as a complement to this post.

I had dinner last night with my friends and college classmates Andy Roberts and Tip Clifton.  Maybe it was the wine, but we got into a pretty deep discussion about potential applications for RSS and related extensions.  Andy’s recently posted some of his ideas for how it could be used beyond blog posts and events for solutions very relevant to Bowstreet’s customers.  In Tip’s world of sophisticated analytics, RSS enables some pretty interesting insights — but as they say, I could tell you but then I’d have to kill you.  Seriously, we’ll elaborate as we get our thoughts together.  Meantime, check out Andy’s post, it’s provocative on its own.

My friend Andrew Grumet has also been working on a very cool RSS extension for TiVo that’s worth hearing about as a good example of creative and useful application of this technology.

A few weeks back I wrote a short post on what I’ve learned so far about blogging.  Probably the biggest idea associated with blogs is RSS (Really Simple Syndication), an open, XML-based standard used by blog sites to notify subscribers of updates.  This evening I came across a post by John Bristowe about a new RSS extension called Event Share Framework (ESF).  ESF allows blog sites that publish calendars to update subscribers, and subscribing clients — even Outlook — to maintain a fresh, integrated view of all calendars subscribed to.

This is a big deal.  Imagine a site called calendar.com that aggregates RSS-ESF feeds (the domain name is taken, btw, even though no live site’s up).  Think Google for events.  Search by where you live / travel, time/ date range, keyword.  Find person/ organization with events you would like to go to/ attend remotely.  Subscribe and get future events and updates sent to your Outlook calendar / PDA calendar automatically.  As a person trying to schedule your next cub scout pack meeting, check calendar.com to see when a good date would be based on “related groups’” calendars (e.g., other organizations in your town, like school, church, sports leagues, etc.).

Business model for calendar.com is Ticketmaster-like cut of event fees.  Additional income stream from Google-like sponsored organization/ event links.  Or maybe a big ISP like Verizon or Comcast could offer this (and blogs for that matter) as part of a “personal pages publishing solution” and charge a few bucks a month for the whole package.  It would certainly make sense as a service for major portals like Yahoo, and maybe local calendar.coms for things like Citysearch and Boston.com

Hard?  Should be a snap to add “post an event” feature to Manila, Moveable Type, etc.  Either they will do it or someone will write the code and sell it to them… John’s post describes the required RSS extension and a mechanism for getting updates into Outlook via Newsgator.  And if Feedster, why not this?

Speaking of other useful RSS extensions, why not taxonomical ones to help categorize posts, events, etc.?  They could use web services that maintain canonical instances of those taxonomies, like an SIC code list for an “industry” tag, or UPC categories, or ISBN classifications for book reviews.  Then publishers could call these web services to populate (batch-update, since these schemes don’t change often) their “drop-down” lists in their posting forms, and readers could use advanced search reliably based on these consistent taxonomies… an RSS-based “Semantic Web”?

Monster recently announced an index of online recruitment activity.  Given their inventory of 30 million resumes and 30% share of the online job placement business, their modern industry and job taxonomy, and their ability to report trends pretty much in real time if they want to, this seems like a huge step forward over what the Labor Dept. publishes.  For businesses that care about these stats — and there are lots of them – this should be very useful and valuable. 

Feels like yet another ingenious application of the lessons of the Binge-o-matic.

So when will Salesforce.com offer indeces on deal sizes, sales cycles, close rates, etc.?

We’ve re-started Enterprise Software Marketing Partners (www.esm-partners.com once the DNS gets mapped).

On reading AMR Research/ Scott Lundstrom’s note on the SCO legal battles today, I sent him this email: