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Summary:

How much do you think Slashdot is worth? Or Nick Denton’s Gawker Media or TheFaceBook or Boing Boing? You can find out the answers here… in my latest Business 2.0 story, The Return of Monetized Eyeballs. A sharp rebound in the online advertising market, and big […]

How much do you think Slashdot is worth? Or Nick Denton’s Gawker Media or TheFaceBook or Boing Boing? You can find out the answers here… in my latest Business 2.0 story, The Return of Monetized Eyeballs. A sharp rebound in the online advertising market, and big media companies like AOL (a division of Time Warner) buying up folks like Weblogs Inc, has prompted a sudden increase in the value of the “eyeballs,” the dreaded phrase from the early days of Internet mania.

This time, the buyout metrics are slightly different as new variables like cost of customer acquisition and stickiness. In the article, I point out that the acquisition price per unique visitor had fallen from an all time high of $710 (Yahoo’s purchase of Broadcast.com) in April 1999 to about 73 cents in November 2001. How are we doing these days? About $10 a unique visitor! Weblogs Inc. co-founder Jason Calacanis advises “And build a brand. Because without that, you’re going nowhere.”

Full story @ Business 2.0 website.

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  1. Om, According to your valuation model ($38/monthly visitor) my sites are in the 50 million plus range – I can give 50% discount for a cash deal, anyone interested :)

  2. No Soap, Radio! » Blog Archive » Om’s Bloganomics by Narendra Rocherolle Monday, November 28, 2005

    [...] Om Malik has posted some speculative valuations in extending his argument that unique users are worth $38 a piece based on recent acquisitions. [...]

  3. The Geek Guy Rants Monday, November 28, 2005

    Bubble-Era Buyouts, more signs of the Apocalypse

    Well I sure seem to be on a Business 2.0 kick right now so let’s keep with it. On top of the “What’s Nextâ€? column by Om Malik he also has an article called “The Return of the Monetized Eyeballsâ€? in the December issue.
    “For highly traffick…

  4. Om, how much is YOUR site worth then? Are you ready to sell out to THE MAN?

  5. David Newberger Monday, November 28, 2005

    well since it doesn’t look like trackbacks are workign on my site I thought I would do this the old fashion way.

    I wrote the following in “Bubble-Era Buyouts, more signs of the Apocalypse”:
    One more sign of the impending apocalyptic return of the bubble-era. This is the first thought that came to mind when I saw the teaser but I read further.

  6. not a chance brian, for my site is just me. look at most of the sites/properties that have been sold are multi-author properties. and well, so is boing boing, gawker media and everyone we created the matrix for.

    weblogs inc sale, or anyone else that was sold fell into that bucket.

  7. gopi, what are your sites? just wondering. :-)

  8. Om… you know I love you, but this is absurd. Like really, really crazy.

    Weblogs, Inc. was bought by AOL because of revenue and revenue growth. Eyeballs and pageviews had nothing to do with it–zero.

    No one in the marketplace is buying things based on eyeballs–no one. It’s all based on revenue.

    Boingboing, like any other web property, is worth 1-10x revenue and 5-30x earnings. So, if BB does 30-50k a month/360-600k a year (which seems possible to me based on the 5m page views a month) it would be worth between 500k and $3M (based on revenue since with five mouths and server hosting to pay for it doesn’t really have earnings–yet!).

    Paying much more than that amount wouldn’t make much sense unless you were an affinity buyer or buying the talent (which is all part time and spoken for on other projects anyway). You would be much better off putting the $3M to work on hiring a staff of 10 writers @ $100k, putting 1M towards a management team, and $1M towards marketing.

    That’s how these deals tend to go down.. people look at the cost of buying vs. building and the numbers Om puts out are so absurd it’s laughable.

  9. Michael Moncur Monday, November 28, 2005

    I have to agree with Jason, those numbers are insane. I have a popular site that generates a substantial revenue and have turned down a couple of offers to buy it at 10-20x its monthly revenue in the last year.

    According to your $38/monthly visitor model, the site is worth 962 times its monthly revenue, or approximately what it would make in 80 years. I’ll gladly accept an offer for that amount, but I just don’t see one coming.

  10. jason and michael, perhaps first thing would be to realize that eyeballs is metaphor for web content properties.

    if you read the full piece and not just focus on the headline – that is the average price per user – and if you read the full piece you will realize that we are making it categorically clear that not all page views are created equal.

    revenues (and potential revenues) are based on page views, users etc. they don’t happen in isolation. Jason should perhaps explain to me how he was “projecting revenues” if not projecting the page views aka eyeballs.

  11. The Geek Guy Rants » Blog Archive » Face the Facts, the Bubble Machine is in Full Swing Tuesday, November 29, 2005

    [...] Well I was planning on going to bed but I have to write about what Jason Calacanis’ had to say about “The Return of Monetized Eyeballsâ€? by Om Malik first. “Om… you know I love you, but this is absurd. Like really, really crazy. Weblogs, Inc. was bought by AOL because of revenue and revenue growth. Eyeballs and pageviews had nothing to do with it–zero. No one in the marketplace is buying things based on eyeballs–no one. It’s all based on revenue. Well… we also had an amazing management team and systems in place–those are very important too. [...]

  12. Davenetics* : Eyeballing for Dollars Tuesday, November 29, 2005

    [...] revenue models these days, but as Om points out, The Return of Monetized Eyeballs is upon us. permalink | media, musings | send var BNDiv = document.getElementById(‘bignews’); BNDiv.innerHTML =”CATEGORY: MEDIA”;   [...]

  13. >> gopi, what are your sites? just wondering

    Om, I am a Search Engine Marketer & this question is a Big No-No in our world :)

  14. Jason, 30x yearly earnings may be common for corporate buyouts but unheard of if you buy/sell sites among mom/pops (that too if the web property depends on search engine traffic)… Many SE traffic dependent adsense content sites can sell for 1-2x earnings max.

  15. I would sell even if somebody offer me 10x earnings :)

  16. Content is King – Are Websites Hot Again? – Allen Tsai – Technology in Motion Tuesday, November 29, 2005

    [...] If anyone who runs a website has read about generating traffic, “Content is King” should be a phrase well known. In a recent article by Om Malik, entitled, “The Return of Monetized Eyeballs,” it seems web properties are getting hot again. [...]

  17. Frankly, sites which rely solely on traffic (the majority of which rely on adverting for revenue, including blogs) seems too heavily dependant upon search engines to be any solid business plan. Granted larger companies sleep easier at night, but no one who in organic search is immune to Google’s wrath.

  18. Hey Om,

    > At $38 per user (the average for recent deals)…

    How did you calculate the $38 per user figure, exactly?

    I’m guessing the MySpace (Intermix Media) deal and … ?

    It does, after all, seem a little high.

    Not that your calculations were wrong (because the acquiring co’s could be going a little m&a crazy)… but, seems a tad off.

    Shanti

  19. Hmmm… I have to believe the value of a site can’t be derived simply by the number of visitors… There has to be a viable business model for any real value to exist, no? Maybe I’m too Web1.0… oh wait, that was the web of the bubble wasn’t it.

  20. What a genius comment:

    “And according to Weblogs Inc. co-founder Jason Calacanis, the most valuable online media companies are those that are already generating revenue. “

  21. I think a lot of people are missing the point. The article IMO is taking a number of factors and brings them down to the lowest common denominator – cost per unique visitor. I don’t think OM intended to break open the gat and flow charts to figure out some sort of elaborate equation to a company’s net worth.

    The reason why there is an average dollar amount tied into each visitor is because each site is different; their readers behave and react differently and create a different ROI depending on the sites business structure and market segment.

    I found the article interesting and sort of fun/light-hearted to read. It’s like listening to those bizarre sports facts you hear the announcers talk about during the football game. You wouldn’t base a business decision on them, but it’s still interesting to know.

  22. Would these fanatastic figures apply to a Vlog?

  23. I am not necessarily agreeing with Om’s valuation methodology but I don’t agree with Jason’s view point.

    I checked out his Blog and the reasons for why he is disagreeing with Om. I dont think his reasoning ties out. If you use his assumptions at http://www.calacanis.com/2005/11/29/ok-lets-stop-the-bubble-machine-right-now#c123226

    The numbers at the high end of the range come in the same ballpark as Om’s.

    But, as I mentioned in that comment, I didn’t fully read Om’s article but the table seems to be catching everybody’s attention and Om should have probably used a range instead of an absolute number in that table atleast for CYA purposes.

  24. Michael Eisenberg Tuesday, December 6, 2005

    See this interesting post from Seeking alpha on some stock implications for the argument as it relates to slashdot http://internetstockblog.com/article/4701

  25. I’m on your side Om – in late September I wrote a blog post titled “Back to Monetizing Eyeballs”. However what is really interesting about all this is that the New York Times is commenting on blog discussions. In which case, why read the newspapers when you can go straight to source?
    References and more meat on all this at:
    http://www.rossdawsonblog.com/weblog/archives/2005/12/the_debate_on_m.html

  26. Shiwej » Blog Series: Om Malik on the Blogosphere Sunday, December 11, 2005

    [...] Together with Miel Van Opstal from Coolz0r, we’ve decided to start a guestblogging series which will run on both our blogs at about the same time. Today is installment number eight of the series and this time we turned to a blogging journalist who’s very well known in the blogosphere: Om Malik. Om writes mostly about the next generation of internet and he also has a weekly 20-minute podcast session with Niall about technology. Besides this he has a big archive of articles he wrote for the Business 2.0 website, where he is a senior writer. [...]

  27. www.Wadblog.com Friday, December 16, 2005

    Top Ten Web 2.0 moments of 2005

    I was reading an article from Richard MacManus where he lists his top 10 web 2.0 moments for this year. Blogging of course features, with the sale of both bloglines to ask jeeves, and also weblogsinc to AOL.
    The hype does seem to be back with the web…

  28. The Steinhorn Stare Sunday, December 25, 2005

    Not All Users Are Created Equal

    Om Malik recently wrote an article for Business 2.0 magazine, in which he discussed “the value of eyeballs.” The point of the article is that over the past 6-8 years, Internet companies have been bought and sold, and if you believe the pr…

  29. Conversion Rater Wednesday, March 15, 2006

    How Much Is Your Site Worth?

    Here we go again. Once again, people are valuing sites based on the amount of traffic or pageviews they’re getting.
    To Om’s credit, it’s a good article with some very informative graphs and some nice comparisons to pre-bubble company…

  30. GigaOM » Blog Archive » 2Moons, An Ad-Supported MMORPG Rises Thursday, August 10, 2006

    […] The eyeball-based business model has a new game – massively multiplayer online role-playing game (MMORPG.) […]

  31. I have a four year old web propert with a 3 mo Alexa rating of 390 and currently at 290 and rising. We get approximately 2.5MM users per month and over 20MM hits per month. We also have more search engine links than Napster and Target. Through surveys of our users we know they love the site and the free tools we provide. We will not take adveritising but instead sell premium versions of our free tools at a low cost so users do not have to come back over and over again. The technology is considered the best in the industry. We also have inquries from other countries to create foreign language versions. I belive this is a new category of social networking. Any thoughts on potential value or what I should ask for a valuation from VC’s?

  32. Both links give a 404 from CNN

  33. Ha the sites and portals being purchased for big moeny are much more than the eyeballs of the early days.

    2Moons Guide

  34. Web 2.0: Valuation of Web Sites 101 at thinkbeta.com Tuesday, October 30, 2007

    [...] that unique visitors should be counted over a period of one month, usually the most recent). This well known and oft-quoted article from November 2005 establishes an average of $38 per unique visitor based on a range of different website [...]

  35. tecosystems » You’re Going to Do What With My Data?: Privacy and Data as a Product Monday, November 2, 2009

    [...] I’ve never been overwhelmingly concerned. Where the revenue model for the dot com era “eyeballs” strategy was equal parts indistinct and aspirational, the Web 2.0 businesses are being built [...]

  36. Michael Arrington’s Road To Millions: Tech News « Wednesday, September 29, 2010

    [...] is an opportunity to reflect on the past decade and the evolution of blog-based media. Gawker Media and Weblogs Inc., have been the torchbearers of this new fast-paced, slightly quirky, highly passionate form of [...]

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