Valuing the Conversation

Hate to sound like a wide-eyed bumpkin, but I have to say I'm amazed at the quantity and quality of comments here (as well as, again, of many gracious notes I've received).  Not sure what I expected--perhaps something closer to 90s-era chat boards.  Suffice it to say that I "get" the whole conversation thing now.  No wonder everyone was yammering incessantly about it at the conference.

Bleary eyed after a combination of the red-eye and late-night obliteration of the Yankees, so I'll hold off on weighing in again on Google v. Microsoft.  In the meantime, here's a cool analysis posted by Tristan Louis on the burgeoning dollar value of these conversations.

Tristan looks at the value of the AOL-Weblogs deal as a function of the number of links to each blog in the network--a proxy for the conversation--as opposed to the raw traffic (a sort of PageRank vs. pageview valuation).  After illustrating that Engadget accounts for 35% of the links in the Weblogs network, he runs a few more numbers and calculates an average-value-per-link value in the deal of $565 to $903.  So check your Technorati stats and get out those calculators...

My guess is that the AOL-Weblogs valuation--like that of many emerging-co takeouts--was based as much on back-of-the-envelope projections and eye-of-the-beholder desire as anything else, but the earn-out component suggests that it will ultimately be linked to standard financial metrics. In any case, as Tristan implies, money follows attention, and the "link" metric is probably as good as any at getting an early handle on value.

Comments

[Jason]

Tristan is a smart guy, but inbound links mean little to nothing. Companies are bought based on revenue, earnings, page views, and growth these days. I'm thrilled with this because I've always liked to focus on the revenue side of the business and that is what the players in the market want today. I can't go into the details of the deal obviously, but I can tell you that our revenue, earning, pageviews, and growth were the key factors in the deal. Also, we had a very, very talented management team in place. People are not buying traffic these days (with MySpace being one of the few exceptions).

I'm sick from the yankee loss too, but I'm happy eddie curry was OKed for the Knicks.

i'm also very happy that you've joined the blogosphere Henry. I've always felt you were one of the most insightful people in the space, and the blog format is made for someone with your brainpower and writing ability.

[Marc Orchant]

As a Weblogs, Inc. blogger, I can validate what Jason has said from my perspective as a member of the organization. Weblogs, Inc. is one of the best-run teams I've had the pleasure to be a part of and the comraderie and esprit de corps among the bloggers is at an all-time high in the wake of Jason's announcement of the AOL deal. The management team Jason and Brian have assembled is absolutely first-rate - passionate and committed to inventing a new kind of business.

I'd also like to extend my "welcome back" to you Henry. I found your personal note to be a wonderfully refreshing bit of honesty and I think it took real courage for you to return via as open a medium as a blog. I enjoyed your MSN-AOL report and think you are spot on regarding the synergies and strength such an alliance could produce.

[Network]

Great work, i like it. Thanks for sharing.
xxxecemxxx Egitim Egitim Exsohbet
Chat Sohbet Chat Sohbet
Chat Sohbet