The Virtual Handshake

Scott Allen and I drafted this summary based on my earlier presentation to the iBreakfast.

There are many businesses that benefit from the growth in blogging, such as telecommunications companies, who welcome the increased amount of billable data traffic on their networks from people blogging from their mobile phones (“moblogging”); web designers who are setting up blogs for clients; or providers of broadband internet. We will focus here on twelve business models we have identified that are directly associated with blogging:

Traditional Businesses Leveraging Blogs
NOTE: None of these first three typically represent an investment opportunity, but we provide them here as a foundation for some of the others below.

1. Individual virtual presence – the use of a blog to enhance your visibility and professional reputation. Benefits include marketing, job search, and business development. Example: www.Teten.com/brain-food , which promotes Teten Recruiting and Nitron Advisors.

2. Corporate virtual presence – the creation of blogs by employees to connect with customer, partners and others. Benefits include one-to-one-marketing, market feedback, and humanizing the firm. Example: Robert Scoble’s blog (http://radio.weblogs.com/0001011)

3. Using blogs to improve existing processes – Many companies are using blogs to replace email newsletters, mailing lists, discussion forums, and other existing communication tools. Example: SchwimmerLegal.com/blog, the blog for a law firm which attributes 20% of their revenues to clients who have come directly from their blog. David Teten’s independent research firm, Nitron Advisors, uses blogs as a marketing vehicle and as a rich mine of sources.

Selling Blog Technology

4. Technology sales focused on individuals – generally, blog software and newsreaders. Revenue is based on a combination of one-time licensing and monthly fees. Examples: Six Apart (publishers of Movable Type), Radio Userland, NewsGator, AmphetaDesk.

5. Technology sales to the enterprise – blogging tools with an emphasis on the corporate market. Examples: Socialtext, SilkBlogs, 21publish.

Media Businesses Using Blogs

6. Blog-based media – publishers who use blogs as their technological infrastructure. Revenue is typically from advertising. Examples: About.com, Creative-Weblogging.com, Corante, Gawker Media, WeblogsInc.com.

7. Premium content – the use of blogs to deliver subscription-based content. Examples: Justin Hitt (Iunctura.com), Graphic Communications World (Quoinpublishing.com), DaringFireball.net.

8. Online communities – Blog-centric online communities are similar in business model to forum-centric communities. Revenue is typically made through a combination of advertising and fees for premium services. Examples: 20six, Blogger, LiveJournal, Xanga, hi5, Userland, Flickr.

Peripheral Services

9. Enabling advertising to blog audience – tools that allow bloggers to receive a share of what advertisers pay for advertising on their site. Examples: Google AdWords/AdSense, BlogAds, PubSub, Feedburner, Waypath Blender. Also, many of the blog-based media listed above perform this same functionality by allowing individual bloggers to join the blog network. For example, Mark Cuban’s Blog Maverick is a member of the Weblogs, Inc. network.

10. Data about the blogosphere – tools for making better use of the many blogs out there, including news readers, aggregators, search engines, and other data analysis tools. Revenue is based on a combination of advertising and fees for premium services. Examples: Technorati, BlogShares.com, BlogCensus.net, Blogdex.net, Bloglines, http://Blo.gs.

11. Consulting – working with organizations to make more effective use of blogs for both internal knowledge management and externally-facing communications. Examples: Stowe Boyd, Lee LeFever, Judith Meskill.

12. Education – providing mass-market interactive training and published books and other materials for learning to make effective use of blogs. Examples: Scott Allen, Rebecca Blood, Biz Stone, John Batelle, Kynn Bartlett.

The investment opportunities in this area shift rapidly. At any point, the market leaders in any of the above proven models may be a good opportunity for follow-on investment. Angel opportunities are more likely to occur around new technologies, particularly the integration of blogging technology with other technologies, such as mobile blogging, multimedia blogging, or integration of email and RSS. Another area for innovation is around the automation of the use of blogs for business and marketing purposes, such as the automatic insertion of appropriate affiliate links or advertising into RSS feeds.