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The Future of Tech May 22, 2008, 5:00PM EST

Beyond Blogs

(page 4 of 4)

Wikipedia founder Jimmy Wales. Today, wikis are a common tool for young workers Patrick Fraser/Corbis Outline

Kerry Miller's blog, Passive Aggressive Notes, has become a sensation Mark Stanton

Facebook's Mark Zuckerberg. The social network is now partly owned by Microsoft Markham Johnson

COMPETITION FROM THE MEGABLOGS

Steve Rubel was our example. The opening spread of our 2005 story featured a full-page photo of Rubel, PR executive and leading blog evangelist. He was stripping off a sweatshirt, Superman-style, in the vastness of Grand Central Terminal. Rubel's job was to help companies communicate in this new world. He extended his brand by blogging. It wasn't a bad gig. He remains a power in blogging, and his stature won him a job directing digital media at PR firm Edelman & Associates from an office with big windows overlooking Times Square.

Sitting there one recent morning, facing a widescreen Mac laptop, Rubel drops a bomb. He doesn't blog much anymore. He lets his popular Micropersuasion site sit fallow for days on end. That would have been sacrilege when we wrote our article. Back then he was posting a dozen times a day—even from bed.

What changed? Two big things, he says: technology and media. In 2005, a smart and hyperactive PR guy with a blog could actually be a leader in tech coverage. Rubel came up with scoops. Since then, megablogs with paid staffs, such as Michael Arrington's TechCrunch and Om Malik's GigaOm, have become titans. And sites like Techmeme and Digg aggregate the hottest news—much of it from the megablogs. These are New Media champions, and they come from outside Old Media ranks. Some of them, it could be argued, wield more power than large metro dailies, or even magazines. Go to the Technorati search engine and see how many blogs link to TechCrunch, the leading source for dealmaking in Silicon Valley. Links are only one measure of influence, but a vital one in the blogosphere. The number is 170,908. That's more than (gulp) BusinessWeek.com.

Fine. TechCrunch and the others get plenty of attention. But what's it worth? Valuation is a hot question in social media. Andrew Baron, the co-founder of Rocketboom, an early video blog, had some fun with it. A few weeks ago, he announced that he was auctioning his Twitter account, which had some 1,300 followers, on eBay (EBAY). Anyone who wanted an instant crowd with some influential followers could bid. (Of course, these followers might not stick around under a new regime. That was part of the risk calculation.) The bidding quickly rose above $500. As the auctioning continued, more people (including us) signed up to follow Baron's account so they could witness this drama in action. That increase in his crowd theoretically raised the value of his Twitter property. In the end, he called it off. As we write, his following has climbed to 2,309.

While we're talking money, let's revisit one of the boldest assertions in the old article. Could a blogging bubble burst? "That's easy," we wrote, answering our own question. "No." The logic was that blogging, a free form of publishing, was anything but a highly capitalized industry. Even blog technology companies such as Six Apart and Technorati were small fry, backed by just a sliver of the venture capital in Silicon Valley. How could an industry built largely on free labor and free software develop a bubble, much less burst? It can't.

But social media sure can. Since our story, major investors and corporations have focused on the profit potential of social sites. Like Baron's Twitter crowd writ large, they promise relationships, millions of them. Such media could be worth a fortune. Strike that: They'd better be. Over the past three years, tech and media companies have been opening up their checkbooks for these properties. Google gobbled up YouTube for $1.65 billion; NewsCorp (NWS) bought MySpace for $588 million; and Microsoft (MSFT) bought a pricey slice of Facebook that put a $15 billion valuation on the company. Venture firms, meanwhile, have been racing to fund socres of social media startups.

For many of them, the business plan remains blurry. Even giants like MySpace are struggling to figure out the financials. And there's no guarantee that Web masses will stay loyal for the long haul. If investors lose faith in these new ventures built on relationships, all hell could break loose. This could convulse Wall Street, deepen the recession, sink pension funds—you name it. But you know what? The next day, we'll be back on the blogs and social networks, checking up on each other, uploading our analyses, and sussing out opportunities in the storm.

Even if the bubble bursts—and we predict it will—the power of social media to transform our businesses and society will only grow.

Links

Two blogging giants, Jeff Jarvis and Arianna Huffington, give their takes on how Old Media is adjusting to the current state of the blogosphere


JEFF JARVIS, BUZZMACHINE
Three years ago, blogs were still a curiosity to a business audience—new enough to warrant a cover story, strange enough to require explaining. Now blogs and social media are not only better understood and accepted, but they are coming to be seen as a necessity in media and, more and more, in business.

Next, I think, BusinessWeek's readers will see that social media are changing their fundamental relationship with customers to be less about serving and more about collaborating. No, I don't mean that every product will be the product of a committee. But customers who want to talk will, and smart companies will not just listen but will engage them in decisions. This will have an impact not just on PR and image but on product design, marketing, sales, customer service—the whole company.

Three years from now, I predict BusinessWeek's cover won't be about blogs or tools but about companies as communities.

ARIANNA HUFFINGTON, HUFFINGTON POST
The growth of New Media journalism will be a hybrid combining the best aspects of traditional print newspapers with the best of what the Web brings to the table. We're getting a glimpse into this with the many changes afoot at Old Media places like the The New York Times, and from New Media players like, well, like the Huffington Post.

The online vs. print debate is totally obsolete. It's as musty as the old barroom argument about Ginger vs. Mary Ann. It's 2008, why not have a three-way? Traditional media have ADD: They are far too quick to drop a story. Online journalists, meanwhile, tend to have OCD—we chomp down on a story, refusing to move on until we've gotten down to the marrow.

The shifting dynamic between the forces of print and online reminds me of Sarah Connor and the T-101 in The Terminator. At first, the visitor from the future (digital) seemed intent on killing Sarah (print). But as the relationship progressed, the Terminator became Sarah and her son's one hope for salvation. Today, you can almost hear digital media (which for some reason has a thick Austrian accent) saying to print: "Come with me if you want to live!"

For more on blogs, including how to start one and maybe even make money from it, watch BusinessWeek TV. To see video clips or find your local station and airtime by Zip Code go to BusinessweekTV.com.

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Baker is a senior writer for BusinessWeek in New York. Green is an associate editor for BusinessWeek .

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